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EM ASIA FX-Asia FX rise as upbeat China factory survey spurs short covering
January 3, 2017 / 7:28 AM / a year ago

EM ASIA FX-Asia FX rise as upbeat China factory survey spurs short covering

* Singapore dollar edges up after Q4 GDP exceeds forecasts
    * Upbeat China Caixin PMI helps spur buy-backs in Asia FX

 (Adds text, updates prices)
    By Masayuki Kitano
    SINGAPORE, Jan 3 (Reuters) - Most Asian currencies edged
higher on Tuesday as an upbeat survey of Chinese factory
activity prompted traders to pare back  bearish bets after the
sell-off in Asian currencies over the past couple of months.
    The South Korean won led the gains with a rise of
0.5 percent against the dollar on the day.      
    The Singapore dollar edged up 0.3 percent, gaining
a lift after data showed that Singapore recorded surprisingly
strong economic growth in the fourth quarter. 
    The Taiwan dollar and the Indian rupee 
also pushed higher.
    The Caixin/Markit Manufacturing Purchasing Managers' index
(PMI) released on Tuesday showed that China's factory activity
picked up more than expected in December as demand accelerated,
with output reaching a near six-year high. 
    Market participants said the gains in Asian currencies on
Tuesday were mainly due to the trimming back of bullish bets on
the U.S. dollar, and of bearish bets against Asian currencies. 
    "I think positions are still probably a little bit long U.S.
dollars, so when we have really positive (Asian) data, I think
we'll see some risk getting reduced," said Stephen Innes, senior
trader for FX broker OANDA in Singapore, referring to the
trimming of long U.S. dollar positions.    
    Analysts cautioned against reading too much into the rise in
Asian currencies against the dollar on Tuesday.
    The dollar could see a pull-back in the near term, but any
sell-off in the dollar and gains in Asian currencies will
probably be short-lived, said Christopher Wong, senior FX
strategist for Maybank in Singapore.   
    "We remain biased for further U.S. dollar upside and prefer
to buy on dips," Wong added.
    Emerging Asian currencies have declined broadly since early
November as U.S. bond yields jumped on expectations that
President-elect Donald Trump's proposals for infrastructure
spending and tax cuts will boost U.S. economic growth and
    The Singapore dollar rose 0.3 percent to 1.4470 per U.S.
dollar, edging away from a 7-year low of 1.4538 set in late
    Data showing that Singapore's economy posted surprisingly
strong growth in the fourth quarter helped support the
city-state's currency. 
    "Right now we have an official call for MAS to ease policy
in April. But if strength continues into the first quarter, the
chance of that happening would be lower," said Michael Wan, an
economist for Credit Suisse, referring to Singapore's central
    Most analysts expect the Monetary Authority of Singapore
(MAS) to keep its exchange-rate based policy unchanged at its
next meeting in April, although some have said it could ease.

  Change on the day at   0651 GMT                        
  Currency                Latest bid   Previous  Pct Move
  Japan yen                   117.39     117.52     +0.11
  Sing dlr                    1.4470     1.4506     +0.25
  Taiwan dlr                  32.205     32.279     +0.23
  Korean won                 1201.95    1208.00     +0.50
  Baht                         35.80      35.80     +0.00
  Peso                        49.780     49.720     -0.12
  Rupiah                       13470      13470     +0.00
  Rupee                        68.10      68.23     +0.20
  Ringgit                     4.4900     4.4845     -0.12
  Yuan                        6.9547     6.9467     -0.12
  Change so                                              
 far in 2017                                     
  Currency                Latest bid   End prev  Pct Move
  Japan yen                   117.39     117.07     -0.27
  Sing dlr                    1.4470     1.4490     +0.14
  Taiwan dlr                  32.205     32.279     +0.23
  Korean won                 1201.95    1207.70     +0.48
  Baht                         35.80      35.80     +0.00
  Peso                         49.78      49.72     -0.12
  Rupiah                       13470      13470     +0.00
  Rupee                        68.10      67.92     -0.26
  Ringgit                     4.4900     4.4845     -0.12
  Yuan                        6.9547     6.9467     -0.12
 (Reporting by Masayuki Kitano; Additional reporting by Yena
Park in SEOUL; Editing by Richard Borsuk)

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