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EM ASIA FX-Asia FX haunted as China devaluation sparks currency war fears
August 12, 2015 / 4:12 AM / 2 years ago

EM ASIA FX-Asia FX haunted as China devaluation sparks currency war fears

* Yuan hits 4-year low after PBOC sets weaker midpoint
    * Ringgit below 4/dollar, rupiah at fresh 17-year trough
    * Singapore dlr, Taiwan dlr, Philippine peso at 5-year lows

 (Adds analyst comment, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Aug 12 (Reuters) - Emerging Asian currencies fell
to multi-year lows on Wednesday after China's central bank
allowed the yuan to drop for the second straight day to a
four-year trough, a move sparking fears of a global currency
war.
    The yuan fell to as low as 6.4301 per dollar, its
lowest since August 2011, after the People's Bank of China
weakened its daily yuan midpoint by 1.6 percent. 
    The People's Bank of China, which described the devaluation
as a one-off step to make the yuan more responsive to market
forces, sought to reassure financial markets it was not
embarking on a steady depreciation. 
    Still, China's move is not seen as a one-off measure and the
renminbi is seen sliding further and driving its regional peers
weaker, analysts said.
    China took Tuesday's step after disappointing economic data
indicated to economists that further stimulus was needed to
revive growth in the world's second-largest economy.
    "It wasn't meant to be one-off for sure and there will be
further depreciation until the PBOC stabilises the spot to
re-align with the fixing, which requires more significant
intervention effort," said Andy Ji, Asian currency strategist
for Commonwealth Bank of Australia in Singapore.
    In the meantime,  Ji added, the U.S. dollar "will march on",
strengthening further against Asian currencies.
    China's devaluation bolstered expectations that other Asian
countries may let their currencies weaken to support their
economies, as long as the pace of depreciation is not too fast.
    The Malaysian ringgit weakened past a psychologically
important 4.0000 per dollar level to hit a fresh 17-year pre-peg
low. Indonesia's rupiah also fell to a level not seen
since July 1998.
    The Singapore dollar, the Taiwan dollar 
and the Philippine peso all touched five-year
troughs.
    South Korea's won slid to near a four-year low.

    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0404 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       125.19         125.13       -0.05
  Sing dlr        1.4124         1.4014       -0.78
  Taiwan dlr      32.194         32.080       -0.35
  Korean won     1192.05        1179.10       -1.09
 *Baht             35.37          35.37        0.00
  Peso             46.29          45.93       -0.77
  Rupiah        13820.00       13595.00       -1.63
  Rupee            64.77          64.19       -0.90
  Ringgit         4.0160         3.9615       -1.36
  Yuan            6.4268         6.3231       -1.61
 
  Change so far in 2015
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       125.19         119.66       -4.42
  Sing dlr        1.4124         1.3260       -6.12
  Taiwan dlr      32.194         31.718       -1.48
  Korean won     1192.05        1099.30       -7.78
  Baht             35.37          32.90       -6.98
  Peso             46.29          44.72       -3.38
  Rupiah        13820.00       12380.00      -10.42
  Rupee            64.77          63.03       -2.69
  Ringgit         4.0160         3.4965      -12.94
  Yuan            6.4268         6.2040       -3.47
  * Financial markets in Thailand are closed for a holiday.

 (Editing by Richard Borsuk)

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