July 20, 2017 / 6:04 AM / a year ago

EM ASIA FX-Asian currencies edge down on dollar recovery and caution ahead of ECB meeting

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    July 20 (Reuters) - Asian currencies were lower on Thursday
as the dollar recovered from 10-month lows, while caution
prevailed among investors waiting for an outcome from the
European Central Bank's policy meeting later in the day.
    The dollar index against a basket of six major
currencies was last up nearly 0.2 percent at 94.93. It struck a
10-month low of 94.476 on Tuesday.
    The ECB meeting is expected to lay the groundwork for an
autumn policy shift emphasising improved growth while trying to
temper expectations after previously setting off a mini-tantrum
in financial markets.
    "There is bit of a cautious positioning ahead of the ECB
today," said Chang Wei Liang, FX strategist at Mizuho Bank.
    "In FX markets, the USD found a footing against Asian
currencies, with investors perhaps watching ECB. Another hawkish
turn could negatively impact higher-yielding Asian FX."
    The Bank of Japan, however, was far from hawkish on Thursday
as it kept monetary policy steady and pushed back the timing for
achieving its inflation target, reinforcing expectations it will
lag well behind other major central banks in scaling back its
massive stimulus programme.
    The Thai baht edged down against the dollar ahead
of June trade data, while the Indian rupee declined on
the day after three successive gaining sessions this week.
    China's yuan weakened after the People's Bank of
China set the midpoint rate at 6.7464 per dollar,
slightly below the Wednesday's nine-month high guidance of
    While most Asian currencies fell as investors waited for 
hints from the European Central Bank on tapering its stimulus
campaign, some analysts believe the ECB adopting a hawkish
stance could benefit Asian currencies. 
    "We do not believe possibility of a withdrawal of euro zone
area stimulus is likely to hurt Asian assets as any ECB
scale-back is likely to be very gradual," said Tariq Ali,
investment strategist at Standard Chartered Bank.
    "Moreover, markets may also see this as an affirmation of
the improving global growth outlook, which is positive for Asian
    The Thai baht edged down against the dollar ahead
of June trade data. A Reuters poll found customs-cleared annual
exports were expected to rise for a fourth straight month in
June but at a slower pace.
    Technical indicators such as the relative strength index
(RSI) showed the Thai baht near overbought levels. 
    "USD/THB has been oversold with rising risks of technical
corrections" said a Scotiabank report.
    The baht has risen nearly 6.5 percent against the U.S.
dollar so far this year, the most in Southeast Asia.
    Thailand's economic growth has not yet been affected by a
strong baht, the finance minister said on Thursday, as the
currency hovered near 26-month highs against the dollar.       
    The rupiah was down 0.08 percent against the dollar
at 13,327 per dollar, ahead of its central bank policy rate
    "We do not expect the BI to adjust its policy rate to keep
rates accommodative to support growth despite elevated
inflation." said a Maybank report. 
    Indonesia's annual inflation accelerated slightly to 4.37
percent in June.
    Analysts said foreign inflows are expected to continue into
Indonesian bonds, supporting the rupiah. 
    Indonesia's 10-year government bond yields about 6.9
percent, the highest among Asian government bonds.   
    The following table shows rates for Asian currencies against
the dollar at 0514 GMT.
  Change on the day at                                        
        0514 GMT                                     
  Currency                 Latest bid  Previous day   Pct Move
  Japan yen              112.110             111.95      -0.14
  Sing dlr               1.369               1.3677      -0.12
  Taiwan dlr             30.449              30.397      -0.17
  Korean won             1125.700            1120.6      -0.45
  Baht                   33.640              33.604      -0.11
  Peso                   50.915               50.94      +0.05
  Rupiah                 13329.000            13317      -0.09
  Rupee                  64.380               64.28      -0.15
  Ringgit                4.288               4.2845      -0.08
  Yuan                   6.765               6.7526      -0.18
  Change so far in 2017                                       
  Currency               Latest bid    End 2016       Pct Move
  Japan yen              112.110             117.07      +4.42
  Sing dlr               1.369               1.4490      +5.81
  Taiwan dlr             30.449              32.279      +6.01
  Korean won             1125.700           1207.70      +7.28
  Baht                   33.640               35.80      +6.42
  Peso                   50.915               49.72      -2.35
  Rupiah                 13329.000            13470      +1.06
  Rupee                  64.380               67.92      +5.50
  Ringgit                4.288               4.4845      +4.58
  Yuan                   6.765               6.9467      +2.69
 (Reporting by Patturaja Murugaboopathy; Editing by Eric Meijer)
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