January 5, 2017 / 7:08 AM / 7 months ago

EM ASIA FX-Asian currencies rise broadly vs dollar as offshore yuan surges

* Offshore yuan jumps as its funding costs surge
    * Implied overnight CNH deposit rate spikes to 96 pct
    * Yuan's surge spurs trimming of long dollar positions
    * S.Korea won up 1.7 pct onshore, Taiwan dollar up 1 pct

 (Adds text, updates prices)
    SINGAPORE, Jan 5 (Reuters) - Asian currencies surged on
Thursday, with the offshore Chinese yuan jumping to its
strongest level in nearly two months, as a spike in funding
costs prompted yuan short sellers to square positions. 
    The offshore yuan climbed to as high as 6.7850 per
U.S. dollar, as of 0640 GMT, its strongest level since Nov. 9.
    China has stepped into both its onshore and offshore yuan
markets to shore up the faltering yuan this week, sparking
speculation that it wants a firm grip on the currency ahead of
U.S. President-elect Donald Trump's inauguration on Jan. 20.
 
    Market participants said the surge in the offshore yuan
helped spur some scaling back of long U.S. dollar positions and
short-covering in Asian currencies.
    "The move helped to trigger some profit-taking in the dollar
 by weakening the outflows story from China," said Philip Wee,
senior currency economist for DBS Bank.
    The onshore yuan also climbed on Thursday,
hitting a one-month high at 6.8720 per U.S. dollar.      
    The South Korean won rose about 1.7 percent in
onshore trading on Thursday. The Taiwan dollar gained 1
percent and the Indonesian rupiah climbed 0.8 percent.
    A local bank dealer in Seoul said the won is taking cues
from the offshore yuan now, adding that long dollar positions
were likely to be reduced ahead of U.S. jobs data due on Friday.
    A drop in U.S. bond yields and the greenback's
broadly weaker tone also helped lift Asian currencies, traders
said.      
    Asian currencies could rise further in the near-term on
short-covering, said a trader for a Japanese bank, adding that
this is especially the case since the yuan could see more gains
if its funding costs stay high.
    The implied overnight deposit rate for offshore yuan spiked
to more than 96 percent at one point on Thursday.   
    Asian currencies had been under pressure since early
November as U.S. bond yields and the dollar jumped on
expectations that Trump's proposals for infrastructure spending
and tax cuts will boost U.S. economic growth and inflation.

    CURRENCIES VS U.S. DOLLAR
  Change on the day at   0630 GMT                        
  Currency                  Latest bid   Previous     Pct
                                              day    Move
  Japan yen                     116.26     117.25   +0.85
  Sing dlr                      1.4336     1.4390   +0.38
  Taiwan dlr                    31.924     32.260   +1.05
  Korean won                   1185.53    1206.40   +1.76
  Baht                           35.70      35.81   +0.31
  Peso                          49.470     49.650   +0.36
  Rupiah                         13325      13435   +0.83
  Rupee                          67.80      68.05   +0.37
  Ringgit                       4.4825     4.4960   +0.30
  Yuan                          6.8831     6.9306   +0.69
                                                         
  Change so                                              
 far in 2017                                       
  Currency                  Latest bid   End prev     Pct
                                             year    Move
  Japan yen                     116.26     117.07   +0.70
  Sing dlr                      1.4336     1.4490   +1.07
  Taiwan dlr                    31.924     32.279   +1.11
  Korean won                   1185.53    1207.70   +1.87
  Baht                           35.70      35.80   +0.29
  Peso                           49.47      49.72   +0.51
  Rupiah                         13325      13470   +1.09
  Rupee                          67.80      67.92   +0.18
  Ringgit                       4.4825     4.4845   +0.04
  Yuan                          6.8831     6.9467   +0.92
                                                         
    

 (Reporting by Masayuki Kitano; Additional reporting by Michelle
Chen in HONG KONG and Yena Park in SEOUL; Editing by Richard
Borsuk)

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