EM ASIA FX-Most Asian currencies fall as trade optimism recedes

August 31, 2018 / in.investing.com / Article Link

(Adds details on Indian rupee, China's yuan, analyst comments)

By Patturaja Murugaboopathy

Aug 30 (Reuters) - Most emerging-Asia currencies weakened on Thursday as caution mounted ahead of an upcoming deadline in the China-U.S. trade dispute, while overnight declines in the Turkish lira TRY= dulled risk appetite.

The dollar index .DXY against a basket of six major currencies hovered near a four-week low of 94.434 touched on Tuesday, but the greenback held firm against most emerging Asian currencies.

"There are no new catalysts (for Asian currencies)," said Sim Moh Siong, FX strategist at Bank of Singapore, adding that the U.S. review of proposed tariffs on $200 billion of Chinese imports next week puts U.S.-China trade tensions in focus.

"For now, the markets are likely to remain wary, even though on the whole, the case against the dollar strength is growing," Sim said.

The deadline for public comment on U.S. President Donald Trump's tariffs on $200 billion of Chinese goods is Sept. 5, with the new measures possibly taking effect next month. 3 percent fall in the Turkish lira the previous day on lingering concerns over Turkey's currency crisis and the Argentina peso's ARS= slump to a record low also kept regional currencies in check.

Higher oil prices and concerns over current account deficits undermined the Indian rupee INR=IN , as the currency hit a new low of 70.825 on the day.

With a fall of nearly 10 percent this year, the rupee is the worst performer among Asian currencies in 2018.

The Turkish crisis put extra scrutiny on emerging market economies with external deficits, including India and its rupee this year, ANZ said in a report.

"Excessive intervention can affect the government's funding plans, especially when the fiscal deficit numbers look stretched and there is a liquidity squeeze. So we don't expect the Reserve Bank of India to defend any particular level, but to only act to smooth the volatility in the currency," the report said.

China's yuan CNY=CFXS fell amid heavy corporate demand for dollars, erasing all of the gains it had made this week following the central bank's latest move to stabilise the currency. Indonesian rupiah IDR=ID touched a near three-year low on the day, pulled lower by month-end demand for dollars and higher U.S. bond yields.

SOUTH KOREAN WON

The South Korean won KRW=KFTC rose 0.12 percent against the dollar on the day.

South Korea's central bank is expected to keep its benchmark interest rate steady on Friday as the job market remained weak and inflation was stubbornly shy of the central bank's target, analysts polled by Reuters said. Korea, unlike some Asian countries, is not under pressure to hike rates to defend the currency, given its sizeable current account surplus and record foreign reserves, DBS said in a note.

"The larger concern for the export-led country is the ongoing trade feud between China and the US that not only threatens supply-chain disruptions but has also led to relatively faster depreciation in other Asian currencies."

The following table shows rates for Asian currencies against the dollar at 0539 GMT.

CURRENCIES VS U.S. DOLLAR

Change as of 0539

GMT

Currency

Latest Previous

Pct

bid

day Move Japan yen

111.650

111.65 +0.00 Sing dlr

1.366

1.3643 -0.09 Taiwan dlr

30.670

30.706 +0.12 Korean won

1109.30

1110.2 +0.08

0

Baht

32.710

32.7 -0.03 Peso

53.420

53.46 +0.07 Rupiah

14670.0

14650 -0.14

00

Rupee

70.745

70.59 -0.22 Ringgit

4.105

4.105 +0.00 Yuan

6.838

6.8205 -0.25

Change so far in 2018

Currency

Latest End 2017

Pct

bid

Move Japan yen

111.650

112.67 +0.91 Sing dlr

1.366

1.3373 -2.07 Taiwan dlr

30.670

29.848 -2.68 Korean won

1109.30 1070.50 -3.50

0

Baht

32.710

32.58 -0.40 Peso

53.420

49.93 -6.53 Rupiah

14670.0

13565 -7.53

00

Rupee

70.745

63.87 -9.72 Ringgit

4.105

4.0440 -1.49 Yuan

6.838

6.5069 -4.84

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