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EM ASIA FX-Asian currencies on defensive; ringgit matches post-1998 lows
December 19, 2016 / 5:31 AM / a year ago

EM ASIA FX-Asian currencies on defensive; ringgit matches post-1998 lows

(Adds text, updates prices)
    * Ringgit matches Sept 2015 low, which was lowest since 1998
    * Won hits lowest level since late June
    * Asia FX has fallen since Fed signalled 3 rate hikes in
2017

    By Masayuki Kitano
    SINGAPORE, Dec 19 (Reuters) - The Malaysian ringgit matched
a post-1998 low set last year and the South Korean won hit a
nearly six-month low on Monday, after the U.S. Federal Reserve
last week signalled a faster-than-expected pace of interest rate
rises in 2017.   
    While the size of Monday's moves was small, Asian currencies
were trading at levels that underscored their weak tone against
the U.S. dollar.       
    The Malaysian ringgit eased a tad to 4.4770, matching
a 17-year low touched in September 2015. A drop past that trough
would take the ringgit to its weakest level against the dollar
since January 1998, during the Asian financial crisis.   
    The South Korean won slipped to as low as 1,188.0 
as of 0432 GMT, its lowest level since late June. The Singapore
dollar was trading within sight of a seven-year low of
1.4490 per dollar set on Friday.
    Asian currencies declined broadly last week, after the Fed
raised interest rates for the first time in a year and signalled
three hikes in 2017, up from around two flagged at its September
meeting.
    The Fed's rate signal had triggered a renewed rise in U.S.
bond yields, boosting the dollar and stoking worries about the
risk of capital outflows from emerging markets, including ones
in Asia.
    For now, Asian currencies were underpinned somewhat after
the greenback backed off from last week's 14-year high
against a basket of major currencies.       
    However, such support for emerging Asian currencies, may
prove short-lived, said Masashi Murata, currency strategist for
Brown Brothers Harriman in Tokyo.
    "There is this general view that market participants are
likely to pare back some long dollar positions ahead of the
Christmas break, but I think some might try and have another go
(at bullish dollar bets) before the holidays," Murata said.
    A trader for a Malaysian bank said market participants are
looking to add to their bullish bets on the dollar, rather than
reduce them. 
    "The (dollar's) dips are going to be shallow," he added.
    Later on Monday, investors will turn their focus to a speech
 by Fed Chair Janet Yellen.      
    Emerging Asian currencies have declined broadly since early
November, as the dollar and U.S. bond yields jumped on
expectations that U.S. President-elect Donald Trump's proposals
for infrastructure spending and tax cuts will boost economic
growth and inflation.
                
    PHILIPPINE PESO
    The Philippine central bank is due to announce an interest
rate decision on Dec. 22, after holding its benchmark interest
rate steady at 3.0 percent in November. 
    Although the central bank should consider raising rates
given increasing inflationary pressures from the peso's recent
weakness against the dollar, it will probably keep policy
unchanged amid concerns about the economic outlook, Murata of
Brown Brothers Harriman wrote in a research note.
    "If the central bank doesn't express strong concern against
peso weakness, there is a risk that peso selling could
accelerate," Murata added. 
    The peso was last trading at 49.945 versus the
dollar, hovering within sight of an eight-year low of 50.00 set
on Nov. 24. 
     
    CURRENCIES VS U.S. DOLLAR     
  Change on the day at   0416 GMT                      
  Currency                Latest bid   Previous     Pct
                                            day    Move
  Japan yen                   117.25     117.90   +0.55
  Sing dlr                    1.4464     1.4455   -0.06
  Taiwan dlr                  31.952     31.967   +0.05
  Korean won                 1187.20    1183.90   -0.28
  Baht                         35.84      35.80   -0.11
  Peso                        49.945     49.920   -0.05
  Rupiah                       13382      13385   +0.02
  Rupee                        67.78      67.75   -0.03
  Ringgit                     4.4770     4.4755   -0.03
  Yuan                        6.9443     6.9510   +0.10
                                                       
  Change so                                            
 far in 2016                                     
  Currency                Latest bid   End prev     Pct
                                           year    Move
  Japan yen                   117.25     120.30   +2.60
  Sing dlr                    1.4464     1.4177   -1.98
  Taiwan dlr                  31.952     33.066   +3.49
  Korean won                 1187.20    1172.50   -1.24
  Baht                         35.84      36.00   +0.45
  Peso                         49.95      47.06   -5.78
  Rupiah                       13382      13785   +3.01
  Rupee                        67.78      66.15   -2.40
  Ringgit                     4.4770     4.2935   -4.10
  Yuan                        6.9443     6.4936   -6.49
 
 (Reporting by Masayuki Kitano; Editing by Richard Borsuk)

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