May 3, 2017 / 6:03 AM / 3 months ago

EM ASIA FX-Asian FX inch up on strong manufacturing activity; Fed in focus

5 Min Read

 (Adds text, updates prices)
    By Shashwat Pradhan
    May 3 (Reuters) - Most Asian currencies crept higher on
Wednesday as strong manufacturing activity across the regional
economies spurred risk appetite, but dollar losses were
contained as investors expect the Federal Reserve could possibly
signal a June rate increase later in the day.
    Factories across much of Asia got off to a solid start in
the second quarter, buoyed by strong global demand, particularly
for hi-tech gadgets which are leading a strong rally in
electronics.
    The Indonesian rupiah appreciated 0.1 percent against
the dollar after manufacturing activity improved for the second
straight month in April to hit a 10-month high.
    The Indian rupee strengthened for a second day
after a business survey showed that Indian manufacturing
activity expanded for a fourth consecutive month in April,
helped by stronger growth in new orders.
    "The manufacturing PMI prints from Asia was mostly upbeat
and well in the expansion territory, suggesting that the
manufacturing momentum still had room to extend in Q2," OCBC
Bank said in a note. 
    Among other currencies, the Taiwanese dollar was
firmer for a second day, rising 0.1 percent to hit its highest
since Sept. 2014.
    Taiwan's central bank said it sees volatility in the local
currency against the U.S. dollar as "unavoidable" and urged
local companies to be vigilant about currency
hedging.
    Markets are also keeping a close eye on the Fed's policy
statement for hints on the U.S. interest rate outlook.
    The Fed is widely expected to keep interest rates unchanged
at the end of its two-day policy meeting on Wednesday, but
investors will look to see whether the central bank downplays
the recent soft patch in the economy to leave the door open for
a rate increase in June.
    "The Federal Open Market Committee should provide some
interest but will offer little in the way of a surprise with the
market more focused on the language surrounding June," Stephen
Innes, senior trader at OANDA said.
    The dollar last traded at 112.07 yen, not very far
from Tuesday's peak of 112.3 yen, its strongest level since
March 21.
    With Japanese markets closed for a public holiday on
Wednesday and the rest of the week, market liquidity is likely
to be thinner than usual.
    
    MALAYSIAN RINGGIT
    
    The Malaysian ringgit appreciated against the dollar
for a sixth-straight day on Wednesday as manufacturing activity
expanded for the first time in two years, supported by rises in
output and new orders.
     The ringgit strengthened 0.3 percent to touch its strongest
level since Nov. 2016.
    "We are positive on the ringgit outlook given the recent
initiatives from Bank Negara Malaysia to broaden and deepen the
onshore financial markets. We interpret those steps as positive
development and expect foreign investors’ confidence to
gradually return," Maybank said in a note.
      
    The following table shows rates for Asian currencies against
the dollar at 0529 GMT.
    
    CURRENCIES VS U.S. DOLLAR
    
  Currency               Latest bid  Previous day  Pct Move
  Japan yen              112.070           111.96     -0.10
  Sing dlr               1.393             1.3932     -0.01
  Taiwan dlr             30.034            30.062     +0.09
  Korean won*            1130.500*        1137.9*     +0.65
  Baht                   34.420             34.49     +0.20
  Peso                   49.920             49.99     +0.14
  Rupiah                 13296.000          13310     +0.11
  Rupee                  64.130             64.21     +0.13
  Ringgit                4.313              4.326     +0.30
  Yuan                   6.891             6.8965     +0.08
                                                           
  Change so far                                            
  Currency               Latest bid  End 2016      Pct Move
  Japan yen              112.070           117.07     +4.46
  Sing dlr               1.393             1.4490     +4.00
  Taiwan dlr             30.034            32.279     +7.47
  Korean won*            1130.500*       1207.70*     +6.83
  Baht                   34.420             35.80     +4.01
  Peso                   49.920             49.72     -0.40
  Rupiah                 13296.000          13470     +1.31
  Rupee                  64.130             67.92     +5.91
  Ringgit                4.313             4.4845     +3.98
  Yuan                   6.891             6.9467     +0.80
 South Korean market was closed for a holiday.

 (Reporting by Shashwat Pradhan in Bengaluru; Editing by Shri
Navaratnam)
  
 
 

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