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EM ASIA FX-Singapore dlr at 7-mth low as grim Q3 GDP keeps easing bets alive; baht up
October 14, 2016 / 5:31 AM / 10 months ago

EM ASIA FX-Singapore dlr at 7-mth low as grim Q3 GDP keeps easing bets alive; baht up

* Singapore dlr briefly up after MAS stands pat
    * Baht gains on hopes for calm after king's death
    * Asia FX up on China data, but weekly losses seen

 (Adds more details, analysts)
    By Jongwoo Cheon
    SINGAPORE, Oct 14 (Reuters) - The Singapore dollar fell to a
seven-month low on Friday after the trade-reliant economy
unexpectedly contracted in the third quarter, keeping
expectations of further policy easing alive.
    The Thai baht rose on hopes of an orderly
succession after the death on Thursday of revered King Bhumibol
Adulyadej, the world's longest-reigning monarch. 
    Most other emerging Asian currencies gained as data showed
China's producer prices surprisingly rose in September for the
first time in nearly five years, easing concerns over industrial
companies' cash flow and their ability to service their massive
debts. 
    Though the Monetary Authority of Singapore (MAS) kept policy
unchanged as expected earlier in the day, the disappointing GDP
reading and gloomy global outlook reinforced views that the
central bank will have to ease in future. 
    The Singapore dollar lost 0.6 percent to 1.3894
versus the U.S. dollar, its weakest since March 4.
    The economy shrank 4.1 percent in July-September on a
seasonally adjusted annualised basis from the previous three
months, defying the median forecast of a 0.3 percent growth.
 
    "If global macro and price pressures deteriorate
precipitously in the intervening months to April 2017, we would
lean towards a re-centring lower," said Emmanuel Ng, foreign
exchange strategist at OCBC Bank, in Singapore.
    "The disappointing Q3 GDP and somewhat dovish overtones in
the policy statement may leave the USD/SGD looking for further
hard room on the upside if broad USD resilience re-emerges," Ng
said.
    OCBC Bank retained its tactical objective for the Singapore
dollar at 1.4040 against the greenback, he added.
    The MAS reviews its exchange-rate based monetary policy
twice a year, in April and October. It surprised markets by
easing in April.
    It manages monetary policy by changes to the exchange rate,
rather than interest rates, letting the Singapore dollar rise or
fall against the currencies of its main trading partners because
trade flows dwarf the city-state's economy.
    
    BAHT UP
    The baht gained as much as 1.3 percent in early trade as
Thai financial assets stabilised and the government urged the
country to remain calm after the death of the king.
    Bangkok shares rose 4 percent, while most government
bond prices advanced.
    While consumer spending and activity could decline as the
nation goes into mourning, major disruptions to the economy are
not expected if a transition is smooth, analysts and diplomats
said.
    The governor of the Bank of Thailand said markets were still
relatively stable and that it would "ook after" liquidity of the
baht in the vent of any tightening.
    Beyond political uncertainties, macroeconomic factors remain
favourable to the baht, said Saktiandi Supaat, Maybank's head of
FX research, in a note.
    "A combination of accommodative monetary policy and
expansionary fiscal policy should continue to support the
economy." Saktiandi said.
    "Once concerns about the royal succession have dissipated
and calm and political stability returns, foreign capital should
continue to flow back into the kingdom."
    
    WEEKLY ASIA FX LOSSES
    Despite Friday's gains, most emerging Asian currencies were
set for weekly losses as the U.S. dollar firms on growing
expectations that the Federal Reserve will raise interest rates
in December.
    "Today's rebound is just position unwinding as some Asian
currencies have been oversold recently," said Qi Gao, FX
strategist for Scotiabank in Singapore.
    "I still prefer to buy dollar against Asian FX on dips ahead
of December Fed meeting."
    The Chinese yuan was on the course for the
largest weekly loss since January, having slid 0.7 percent.
Disappointing September trade data raised speculations that
Beijing may allow the renminbi to depreciation further to
support the economy. 
    South Korea's won led weekly regional losses,
having lost 1.7 percent against the dollar so far this week.
    Foreign investors sold Seoul shares as Samsung
Electronics Co Ltd said it scrapped its fire-prone
Galaxy Note 7 smartphone. The decision ignited some concerns
over a slowdown in exports.
    The Malaysian ringgit has slumped 1.3 percent
throughout this week.
    Malaysia reported bond outflows of $2 billion in September,
the largest monthly bond outflows since August last year, when 
the country's markets tumbled on a political crisis linked Prime
Minister Najib Razak and corruption allegations involving
indebted state fund 1Malaysia Development Berhad (1MDB).

    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0500 GMT
  Currency                 Latest bid   Previous day  Pct Move
  Japan yen                    104.06         103.72     -0.33
  Sing dlr                     1.3887         1.3815     -0.52
  Taiwan dlr                   31.705         31.760     +0.17
  Korean won                  1135.00        1135.90     +0.08
  Baht                          35.27          35.55     +0.80
  Peso                         48.420         48.340     -0.17
  Rupiah                        13060          13075     +0.11
  Rupee                         66.85          66.93     +0.12
  Ringgit                      4.2100         4.2110     +0.02
  Yuan                         6.7245         6.7256     +0.02
                                                              
  Change so far in 2016                                       
  Currency                 Latest bid  End prev year  Pct Move
  Japan yen                    104.06         120.30    +15.61
  Sing dlr                     1.3887         1.4177     +2.09
  Taiwan dlr                   31.705         33.066     +4.29
  Korean won                  1135.00        1172.50     +3.30
  Baht                          35.27          36.00     +2.07
  Peso                          48.42          47.06     -2.81
  Rupiah                        13060          13785     +5.55
  Rupee                         66.85          66.15     -1.04
  Ringgit                      4.2100         4.2935     +1.98
  Yuan                         6.7245         6.4936     -3.43
 
 (Reporting by Jongwoo Cheon; Editing by Kim Coghill)

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