EM ASIA FX-Singapore dollar rises, won hits 2-month highs

* Singapore dollar up but analysts expect correction

* Won rise triggers suspected dollar-buying intervention

SINGAPORE, July 31 - The Singapore dollar gained on Friday in tandem with stocks but expectations grew that its relatively high levels may trigger a correction, while the South Korean won's rise was limited by suspected official intervention.

Asian stocks were poised to score double-digit gains in July as investors keep flocking to the region that is seen leading the a global economic recovery. [ID:nHKG97383].

SINGAPORE DOLLAR

The Singapore dollar <SGD=> gained 0.3 percent to 1.44 per dollar in step with local stocks, but some analysts expected it to weaken over the longer term.

"It's all quiet as investors are squaring positions for weekend," said a Singapore-based trader.

Singapore dollar has gained 8 percent since early March thanks to optimism about the global economy, but analysts believe it is headed for a correction as the city state's economy has yet to show a sustained recovery.

"The currency is trading on expensive valuations at a time when the balance of payments remains soft and Singapore dollar's NEER is trading towards the top of its band," Stewart Newnham, analyst at Morgan Stanley, said in a note.

"We therefore maintain our year-end target of 1.49, although we would recommend expressing a short Singapore dollar view with cross-trades."

WON

The won <KRW=> gained as much as 0.9 percent to a two-month high at 1,225.9 per dollar as investors snapped up local stocks, but suspected dollar-buying intervention by authorities limited its further advance.

"The Bank of Korea still tried to support the dollar, but not aggressively," said a trader in Singapore.

The won has been shackled between 1,220 and 1,300 in the past two weeks, torn between improvements in Asia's fourth-largest economy and persistent jitters about official intervention.

That has naturally depressed won's volatilities, with one-month implied volatilities <KRWVOL> hovering near 14 percent on Friday, down from 24 percent in mid-July.

"We expect the dollar/won to remain under downward pressure until the re-pricing in global financial markets is completed, something we think will happen in early fourth-quarter of 2009," analysts at ING said in a note.

The Bank of Korea would use currency intervention as a way to re-build its foreign exchange reserves, which fell during the height of global financial crisis, they said. CURRENCIES VS U.S. DOLLAR Change on the day at 0624 GMT Currency Latest bid Previous day Pct Move Japan yen 95.21 95.52 +0.33 Sing dlr 1.4395 1.4445 +0.35 Taiwan dlr 32.736 32.857 +0.37 Korean won 1227.20 1236.80 +0.78 Baht 34.02 34.03 +0.03 Peso 48.06 48.11 +0.09 Rupiah 9905.00 9950.00 +0.45 Rupee 48.16 48.35 +0.40 Ringgit 3.5140 3.5290 +0.43 Yuan 6.8316 6.8323 +0.01 Change so far in 2009 Currency Latest bid End prev year Pct Move Japan yen 95.21 90.60 -4.84 Sing dlr 1.4395 1.4340 -0.38 Taiwan dlr 32.736 32.860 +0.38 Korean won 1227.20 1259.50 +2.63 Baht 34.02 34.80 +2.29 Peso 48.06 47.52 -1.12 Rupiah 9905.00 11000.00 +11.06 Rupee 48.16 48.71 +1.15 Ringgit 3.5140 3.4500 -1.82 Yuan 6.8316 6.8230 -0.13