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EM ASIA FX-Taiwan dollar hits 19-month high; most Asia FX set for weekly gains
February 3, 2017 / 6:16 AM / 10 months ago

EM ASIA FX-Taiwan dollar hits 19-month high; most Asia FX set for weekly gains

* Taiwan dollar touches highest level in nearly 19 months
    * China bond yields up as PBOC raises short-term rates; yuan
firms
    * Most Asia FX on track for weekly gains as dollar falters
    * U.S. nonfarm payrolls due later on Friday

 (Adds text, updates prices)
    SINGAPORE, Feb 3 (Reuters) - The Taiwan dollar set a
19-month high on Friday and most Asian currencies were on track
for weekly gains as worries about U.S. President Donald Trump's
policy priorities helped weigh on the greenback.    
    The Taiwan dollar breached the key 31.00 per U.S. dollar
level and reached a high of 30.950 at one point, its
strongest level since July 2015.
    Gains in the Taiwan dollar have been driven by recent U.S.
dollar weakness and net buying by foreign investors in domestic
stocks, analysts say. 
    "It's just general (U.S.) dollar weakness," said Sean
Yokota, head of Asia strategy for Scandinavian bank SEB in
Singapore.
    "I think that we're still going to get (U.S.) dollar
strength, especially heading into second quarter. I prefer still
to be long dollars versus Taiwan," Yokota added.
    Selling the Taiwan dollar can be a way to hedge against the
risk of increasing trade tensions between the United States and
Asia, he said. 
    China's yuan firmed in the first day of onshore
trade after a week-long break for the Lunar New Year as the
central bank surprisingly raised short-term interest rates -
piling pressure on the bond market. 
    The People's Bank of China raised the interest rate on open
market operation reverse repurchase agreements (repos) by 10
basis points. 
    The move reinforced views that Chinese authorities are
intent on both containing capital outflows and reining in risks
to the financial system created by years of debt-fueled
stimulus.  
    Most emerging Asian currencies were on track for weekly
gains, after the greenback retreated amid worries that U.S.
President Donald Trump may be focusing more on trade
protectionism than reflationary fiscal policies.
    The dollar has also come under pressure after Trump and 
trade adviser Peter Navarro recently criticised Germany, Japan
and China, saying the three key U.S. trading partners were
engaged in devaluing their currencies to U.S. disadvantage.
    
    While the dollar could get a boost if U.S. jobs data due
later on Friday comes in stronger than expected, such a bounce
may prove short-lived, said a trader for a Malaysian bank in
Kuala Lumpur.
    "U.S. dollar is on a downtrend because Trump wants a lower
U.S. dollar," the trader said.
    Some analysts, however, say the dollar will probably regain
strength against Asian currencies once Trump unveils details of
fiscal stimulus, with the greenback also seen likely to benefit
from expected rises in U.S. interest rates this year.
    
    CURRENCIES VS U.S. DOLLAR
  Change on the day at   0544 GMT                        
  Currency                Latest bid   Previous  Pct Move
                                            day  
  Japan yen                   113.04     112.81     -0.20
  Sing dlr                    1.4123     1.4114     -0.06
  Taiwan dlr                  31.040     31.101     +0.20
  Korean won                 1146.80    1146.80     +0.00
  Baht                         35.09      35.06     -0.07
  Peso                        49.795     49.755     -0.08
  Rupiah                       13345      13350     +0.04
  Rupee                        67.39      67.37     -0.03
  Ringgit                     4.4230     4.4220     -0.02
  Yuan                        6.8692     6.8807     +0.17
                                                         
  Change so far                                          
 in 2017                                         
  Currency                Latest bid   End prev  Pct Move
                                           year  
  Japan yen                   113.04     117.07     +3.57
  Sing dlr                    1.4123     1.4490     +2.60
  Taiwan dlr                  31.040     32.279     +3.99
  Korean won                 1146.80    1207.70     +5.31
  Baht                         35.09      35.80     +2.05
  Peso                         49.80      49.72     -0.15
  Rupiah                       13345      13470     +0.94
  Rupee                        67.39      67.92     +0.79
  Ringgit                     4.4230     4.4845     +1.39
  Yuan                        6.8692     6.9467     +1.13
 
 (Reporting by Masayuki Kitano in SINGAPORE; Additional
reporting by J.R. Wu in TAIPEI, Winni Zhou and Elias Glenn in
SHANGHAI; Editing by Kim Coghill)

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