October 18, 2016 / 5:26 AM / 9 months ago

EM ASIA FX-Dollar retreat supports Asia FX; yuan turns weaker

5 Min Read

* Yuan hits 6-year low again; China Q3 growth seen at 6.7
pct
    * Won gains as foreigners continue buying Korean equities
    * Baht rises; capital outflows limit upside

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Oct 18 (Reuters) - Most emerging Asian currencies
rebounded on Tuesday with the dollar taking a breather, while
fragile risk sentiment curbed the prospect of further upside for
regional currencies.
    China's yuan started the day firmer but reversed 
course to hit another six-year low ahead of Chinese economic
data on Wednesday. Third-quarter growth in the world's
second-largest economy was seen steady at 6.7 percent on
increased government spending and a property boom, a Reuters
poll showed. 
    The South Korean won led regional appreciation on
sustained stock inflows. The Thai baht gained as most
government bond prices rose with foreigners adding
local debt holdings.
    Malaysia's ringgit rose as gains in crude prices
eased concerns over the country's oil and gas revenues.
    The dollar fell against a basket of six major
currencies after recently strengthening as markets priced in
expectations for a Federal Reserve rate increase in December, a
growing headwind for emerging markets.
    Federal Reserve Vice Chairman Stanley Fischer said on Monday
that economic stability could be threatened by low interest
rates, but it was "not that simple" for the Fed to raise rates.
 
    Despite the greenback's retreat, emerging Asian currencies
may not strengthen much as investors stay wary of higher U.S.
rates as well as uncertainties surrounding U.S. elections and
Britain's exit from the European Union, analysts said.
    "USD/Asia took a breather but should remain supported in
coming months as uncertainties over U.S. elections, December
FOMC and Brexit linger," said Andy Ji, Asian currency strategist
for Commonwealth Bank of Australia in Singapore, referring to
the Federal Open Market Committee.
    
    WON
    The won rose as foreign investors were set to become net
purchasers of Seoul shares for a fourth straight
session.
    Concerns appeared to have been excessive over the impact on
exports from Samsung Electronics Co Ltd's Galaxy
Note 7 smartphone production halt, some analysts said.
    "The consumer electronics cycle is nowadays very short with
new product launches happening at ever shorter cycles," said
Frederic Neumann, co-head of Asian economic research at HSBC in
Hong Kong.
    "In the course of about six months, any negative impact from
the product cancellation will likely wear off."
    Foreign investors bought a combined net 229.1 billion won
($202.2 million) worth of Samsung stocks over the prior three
consecutive sessions, a Korea Exchange official said. That
compared with total stock inflows of 515.9 billion won to the
main equity market during the period, according to the exchange
data.
    
    BAHT
    The baht rose as foreign investors were poised to become net
buyers in the local bond market on Tuesday after the recent
selling spree, Thai Bond Market Association data showed.
    The Thai currency cut some of its earlier gains due to stock
and bond outflows.
    Investors remained concerned over political uncertainty and
the risk of economic slowdown in Thailand after the death of
King Bhumibol Adulyadej.

    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0515 GMT
  Currency                Latest bid   Previous day  Pct Move
  Japan yen                   103.92         103.88     -0.04
  Sing dlr                    1.3872         1.3895     +0.17
  Taiwan dlr                  31.712         31.770     +0.18
  Korean won                 1131.40        1137.90     +0.57
  Baht                         35.17          35.28     +0.32
  Peso                        48.500         48.525     +0.05
  Rupiah                       13043          13067     +0.18
  Rupee                        66.75          66.89     +0.21
  Ringgit                     4.2035         4.2150     +0.27
  Yuan                        6.7400         6.7385     -0.02
                                                             
  Change so far in 2016                                      
  Currency                Latest bid  End prev year  Pct Move
  Japan yen                   103.92         120.30    +15.76
  Sing dlr                    1.3872         1.4177     +2.20
  Taiwan dlr                  31.712         33.066     +4.27
  Korean won                 1131.40        1172.50     +3.63
  Baht                         35.17          36.00     +2.36
  Peso                         48.50          47.06     -2.97
  Rupiah                       13043          13785     +5.69
  Rupee                        66.75          66.15     -0.89
  Ringgit                     4.2035         4.2935     +2.14
  Yuan                        6.7400         6.4936     -3.66
 
 (Reporting by Jongwoo Cheon; Editing by Jacqueline Wong)

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