February 16, 2017 / 6:34 AM / 5 months ago

EM ASIA FX-Taiwan dollar touches 20-month high; won and yuan edge higher

6 Min Read

    * Taiwan dollar sets 20-month peak, later turns lower
    * Won hits 3-month high, then pares some gains
    * Upbeat U.S. economic data supports risk sentiment, Asia FX

 (Adds text, updates prices)
    By Masayuki Kitano
    SINGAPORE, Feb 16 (Reuters) - The Taiwan dollar climbed to a
20-month high on Thursday, and the South Korean won hit a
three-month peak, after data showed the U.S. economy was on a
solid footing, boding well for Asian  economies.
    A pullback in the U.S. dollar, after it set a one-month high
against a basket of six major currencies on Wednesday, also lent
support to emerging Asian currencies. 
    The Taiwan dollar rose to 30.66 per U.S. dollar at
one point, its strongest level since late May 2015. It later
turned lower and was last down 0.2 percent on the day. 
    The South Korean won climbed as high as 1,133,
its highest since Nov. 9. The won later pared its gains and was
last up 0.1 percent at 1,140.70.
    The won pared gains after South Korea's finance minister
said there was some severe volatility in the currency market.

    The comments heightened jitters about the possibility of
central bank intervention to curb the won's appreciation, and
triggered a pullback in the won.
    Elsewhere, the Chinese yuan and Thai baht
 edged higher against the U.S. dollar.
    Asian currencies showed resilience even after U.S. Federal
Reserve Chair Janet Yellen's testimony to Congress this week and
upbeat U.S. economic data were seen raising the chances the Fed
would raise interest rates in March. 
    Signs of solid U.S. economic growth, however, are positive
for Asian economies, who will benefit from exports, and a
supportive factor for regional currencies, analysts said.
    "I think the main driver here is still the global reflation
theme. Recent data shows that reflation is intact and broadening
out globally and we're seeing the pick-up in the trade data
across Asia," said Sim Moh Siong, FX strategist for Bank of
Singapore.
    Data on Wednesday showed that U.S. retail sales rose more
than expected in January and consumer prices recorded their
biggest gain in nearly four years, while manufacturing output
rose.
    But Asian currencies could face headwinds if Fed officials
continue to deliver hawkish comments on the monetary policy
outlook, said Gao Qi, FX strategist for Scotiabank in Singapore.
    Under that scenario, the dollar is likely to rise across the
board, although the gains will probably be modest, he said.
    "We don't expect a big gain in the dollar index as an
excessively strong dollar is not in Trump team's interest," Gao
said, referring to U.S. President Donald Trump's administration.
    
    MALAYSIAN RINGGIT
    Malaysia's economy grew 4.5 percent in the fourth quarter
from a year earlier, ending a year of tepid growth on a stronger
note helped by solid exports and resilient domestic demand, data
showed on Thursday.
    There was little reaction in the Malaysian ringgit,
which was down 0.2 percent on the day.
    
    INDONESIAN RUPIAH
    The rupiah held steady ahead of an interest rate
decision by Indonesia's central bank, which is expected to keep
its benchmark interest rate steady at 4.75 percent on Thursday.

    There was little reaction in the rupiah to the news that the
race to become governor of Indonesia's capital was heading for a
second round between the incumbent Christian and a Muslim former
education minister, after neither appeared to win a majority in
Wednesday's election.

    CURRENCIES VS U.S. DOLLAR        
  Change on the day at   0538 GMT                       
  Currency               Latest bid   Previous  Pct Move
                                           day  
  Japan yen                  113.82     114.16     +0.30
  Sing dlr                   1.4187     1.4187     +0.00
  Taiwan dlr                 30.820     30.765     -0.18
  Korean won                1140.70    1142.20     +0.13
  Baht                        34.98      35.01     +0.09
  Peso                       49.930     49.920     -0.02
  Rupiah                      13325      13328     +0.02
  Rupee                       66.93      66.91     -0.03
  Ringgit                    4.4540     4.4470     -0.16
  Yuan                       6.8583     6.8710     +0.19
                                                        
  Change so far                                         
 in 2017                                        
  Currency               Latest bid   End prev  Pct Move
                                          year  
  Japan yen                  113.82     117.07     +2.86
  Sing dlr                   1.4187     1.4490     +2.14
  Taiwan dlr                 30.820     32.279     +4.73
  Korean won                1140.70    1207.70     +5.87
  Baht                        34.98      35.80     +2.36
  Peso                        49.93      49.72     -0.42
  Rupiah                      13325      13470     +1.09
  Rupee                       66.93      67.92     +1.49
  Ringgit                    4.4540     4.4845     +0.68
  Yuan                       6.8583     6.9467     +1.29
 
 (Reporting by Masayuki Kitano; Additional reporting by Reuters
FX anlayst Ewen Chew; Editing by Jacqueline Wong)
  
 
 

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