June 26, 2017 / 7:02 AM / 6 months ago

EM ASIA FX -Taiwan dollar, won advance; other Asian currencies little changed

 (Adds text, updates prices)
    By Shashwat Pradhan
    June 26 (Reuters) - The South Korean won and the Taiwan
dollar headed for a third  day of gains on Monday, as the dollar
came under some pressure after a subdued inflation outlook
capped U.S. bond yields and raised questions about Federal
Reserve plans to tighten policy. 
    Yields on the benchmark 10-year Treasury note
rose briefly after the Fed tightened policy this month but have
drifted lower since then, as expectations of low inflation
continued to boost demand for longer-dated debt.
    "U.S. dollar weakness is driven by market expectations of
U.S. Fed rate hike cycle weakening on weaker inflation outlook
and delayed fiscal outlook," said Mathan Somasundaram,
Sydney-based market portfolio strategist at Blue Ocean Equities
in a note.
    On the political front, investors will be watching the vote
on a U.S. Senate healthcare bill to replace Obamacare. But with
as many as five Republican senators opposing the bill, getting a
vote by the end of this week could be difficult. 
    "Another U.S. health care fail may be another negative
catalyst for the U.S dollar," Somasundaram added.
    On Monday, the won led gains in the region,
strengthening as much as 0.4 percent against the dollar, buoyed
by a stock market rally that saw South Korean shares close at a
record high.
    The Korea Composite Stock Price Index (KOSPI) ended
up 0.4 percent to 2,388.66, led by big gainers for major
technology shares.
    Positive sentiment was also underpinned by the South Korean
central bank saying the country's South Korea's economy is
expected to see gradual improvement this year.
    The Taiwan dollar was the other big gainer in the
region, climbing as much as 0.4 percent in its biggest intra-day
percentage rise in one month.
    Taiwan May industrial output expanded 0.8 percent
year-on-year, data released by the island's Ministry of Economic
Affairs showed.
    Most other emerging Asian currencies were flat to lower on a
day when many Asian financial markets were closed to celebrate
holidays at the end of the Muslim fasting month.
    The yen drifted marginally lower after four-straight
sessions of gains.
    The yuan dipped 0.1 percent against the dollar,
heading for its eighth-straight day of losses in what would be
its longest such streak since October 2016.
    A surge in the yuan's value at the end of May had been
largely engineered by the authorities, but traders have shifted
their focus to economic fundamentals and have doubts regarding
how long the central bank will keep money rates
    The Thomson Reuters/HKEX Global CNH index, which
tracks the offshore yuan against a basket of currencies on a
daily basis, stood at 93.89, weaker than the previous day's
    The following table shows rates for Asian currencies against
the dollar at 0626 GMT.
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    111.350     111.26        -0.08
 Sing dlr*                    1.387       1.3872        +0.04
 Taiwan dlr                   30.324      30.400        +0.25
 Korean won                   1136.500    1138.8        +0.20
 Baht                         33.953      33.938        -0.04
 Peso*                        50.230      50.345        +0.23
 Rupiah*                      13325.000   13325         +0.00
 Rupee*                       64.520      64.52         +0.00
 Ringgit*                     4.287       4.2865        +0.00
 Yuan                         6.844       6.8380        -0.09
 Change so far in 2017                                  
 Currency                     Latest bid  End 2016      Pct Move
 Japan yen                    111.350     117.07        +5.14
 Sing dlr*                    1.387       1.4490        +4.49
 Taiwan dlr                   30.324      32.279        +6.45
 Korean won                   1136.500    1207.70       +6.26
 Baht                         33.953      35.80         +5.44
 Peso*                        50.230      49.72         -1.02
 Rupiah*                      13325.000   13470         +1.09
 Rupee*                       64.520      67.92         +5.27
 Ringgit*                     4.287       4.4845        +4.62
 Yuan                         6.844       6.9467        +1.50
 * Financial markets in India, Indonesia, Malaysia, the
Philippines and Singapore are closed for holidays.

 (Reporting by Shashwat Pradhan in Bengaluru; Editing by Richard

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