May 24, 2017 / 6:12 AM / 3 months ago

EM ASIA FX-Asian currencies weak, Moody's China downgrade sours mood

 (Adds details, updates prices)
    By Rushil Dutta
    May 24 (Reuters) - Asian currencies weakened on Wednesday as
an unexpected downgrade of China's debt rating by Moody's hit
sentiment, and dealers awaited the release later in the global
day of minutes from this month's U.S. Federal Reserve policy
meeting.
     Moody's Investors Services downgraded China's long-term
local and foreign currency issuer ratings citing expectations
that the financial strength of the world's second-biggest
economy would dwindle in the coming years.
    The move took a toll on Asian stocks as it heightened 
concerns over tighter regulation, rising borrowing costs and
signs of an economic slowdown in China.
    Asian shares excluding Japan were about 0.3
percent lower, despite gains on Wall Street overnight. 
   "It’s quite clear that it’s going to be quite negative in
terms of sentiment,  particularly at a time when China is
looking to derisk the banking system, as well as at a time when
there’s going to be some potential restructuring of SOEs
(state-owned enterprises)," said Vishnu Varathan, head of
economics and strategy at Mizuho Bank's Treasury. 
    The Chinese yuan eased 0.04 percent, making its
fourth session of decline in the past five days 
    However, analysts believe currencies whose economies are
dependent on exports to China could show signs of stress during
the session.
    "To some extent yen may be affected. Some commodity related
currencies in the region too: the IDR (Indonesian rupiah), for
example; and the (Philippines) peso," said Saktiandi Supaat,
head of FX research at Maybank in Singapore.
    The yen and the rupiah were both marginally off.
    The Thai baht was 0.1 percent lower ahead of a
central bank policy meeting later in the day where the Bank of
Thailand is expected to stand pat on its benchmark interest rate
of 1.5 percent.
    
    PHILIPPINE PESO
    The peso was the biggest loser in the region,
extending losses from the previous session by falling 0.3
percent, its biggest drop in two weeks.
    Analysts believe that while Philippines may not have a
massive resources export relationship with China, it certainly
has tightened structural relationships whith China over time.
    
    S.KOREAN CENBANK SEEN HOLDING POLICY
    In its first policy meeting since president Moon Jae-in took
office on May 10, the Bank of Korea is expected to keep its base
rate unchanged at 1.25 percent on Thursday, a Reuters poll
showed.
    Of the 19 economists surveyed, nine expect a rate hike next
year as the bank's next move, while the rest expect no moves for
some time.
    The central bank's assessment of the economy will be the
focus of attention in the meeting. 
    The won lost 0.2 percent, and is headed for a
second straight session of decline. 

 CURRENCIES VS U.S. DOLLAR
 Change on the day at   0541 GMT                        
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    111.870     111.77        -0.09
 Sing dlr                     1.391       1.3902        -0.04
 Taiwan dlr                   30.180      30.166        -0.05
 Korean won                   1126.600    1124.2        -0.21
 Baht                         34.460      34.418        -0.12
 Peso                         49.980      49.82         -0.32
 Rupiah                       13314.000   13300         -0.11
 Rupee                        64.915      64.89         -0.05
 Ringgit                      4.301       4.292         -0.20
 Yuan                         6.893       6.8890        -0.05
                                                        
 Change so far                                          
 Currency                     Latest bid  End 2016      Pct Move
 Japan yen                    111.870     117.07        +4.65
 Sing dlr                     1.391       1.4490        +4.19
 Taiwan dlr                   30.180      32.279        +6.95
 Korean won                   1126.600    1207.70       +7.20
 Baht                         34.460      35.80         +3.89
 Peso                         49.980      49.72         -0.52
 Rupiah                       13314.000   13470         +1.17
 Rupee                        64.915      67.92         +4.63
 Ringgit                      4.301       4.4845        +4.28
 Yuan                         6.893       6.9467        +0.78
 
 (Reporting by Rushil Dutta in Bengaluru; Editing by Simon
Cameron-Moore)
  
 
 

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