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EM ASIA FX-Asia FX weak after Trump's tax plan fails to impress; ECB eyed
April 27, 2017 / 5:48 AM / 7 months ago

EM ASIA FX-Asia FX weak after Trump's tax plan fails to impress; ECB eyed

 (Adds text, updates prices)
    By Anusha Ravindranath
    April 27 (Reuters) - Most emerging Asian currencies weakened
on Thursday as risk sentiment remained fragile after
much-awaited tax reform plans from U.S. President Donal Trump
did not boost investor confidence as expected.
    Traders were also wary ahead of the European Central Bank's 
policy meeting later in the day. 
    Trump's proposal to slash tax rates for businesses and on
overseas corporate profits returned to the U.S. didn't excite
the markets, as it failed to offer details on how it would be
paid for without increasing the country's deficit.
    Emerging Asian currencies took cues from weakness in broader
Asian equities, which pulled back from a near two-year
    "Risk-on environment lately has caused most Asian FX to
rally but I think the rally is overdone as global risks remain
clearly high in both economic and political areas." said Amy
Yuan Zhuang, Nordea Markets’ Chief Asia Analyst. 
    "The tax plan announced yesterday works once again as a
wake-up call for the market that the U.S. economic boom may not
happen just yet," Zhuang said.
    "I don't think this is a game changer for risk reversal, but
it definitely kills some of the animal spirit we have seen."
    Meanwhile, investors will be looking to the ECB's meeting
for any clues on whether it will start to pare monetary stimulus
in the coming months.
    "We don't expect any moves from ECB today, but of course,
any underlying change of tones reg the tapering will be negative
for Asian FX, in terms of expectation of tighter liquidity" Amy
    The South Korean won led losses among emerging
Asian currencies, breaking a six-day winning streak. The Thai
baht weakened to its lowest in two weeks.
    The Philippine peso fell to a near three-week low
while the Taiwan dollar pulled back from a two-and-a-half year
high hit in the previous session and was steady against the
dollar at 0405 GMT.
    The Indian rupee retreated from a twenty-month high
hit on Wednesday.
    The South Korean won was the worst performer, losing as much
as 0.6 percent against the dollar, even after the country raised
its export outlook this year on the back of stronger than
expected quarterly gross domestic product data.
    South Korea and the United States agreed on Thursday to take
 "swift punitive measures" against North Korea in the event of
more provocation.   
    The country has been facing a number of challenges on the
political front with recent one being the renewed tension in the
Korean Peninsula.
    In the backdrop of existing political tensions, South Korea
is set to elect its new president in May following the
impeachment of ex-leader Park Geun-hye.
    The won has appreciated around 6.8 percent against U.S.
dollar this year. 

The following table shows rates for Asian currencies against the
dollar at 0508 GMT.
  Currency                Latest  Previous    Pct
                             bid       day   Move
  Japan yen              111.220    111.03  -0.17
  Sing dlr               1.396      1.3956  +0.01
  Taiwan dlr             30.127     30.151  +0.08
  Korean won             1130.80    1125.1  -0.50
  Baht                   34.500      34.44  -0.17
  Peso                   49.870      49.78  -0.18
  Rupiah                 13295.0     13283  -0.09
  Rupee                  64.090      64.12  +0.04
  Ringgit                4.343       4.346  +0.07
  Yuan                   6.896      6.8927  -0.04
  Change so far                                  
  Currency               Latest   End 2016    Pct
                         bid                 Move
  Japan yen              111.220    117.07  +5.26
  Sing dlr               1.396      1.4490  +3.83
  Taiwan dlr             30.127     32.279  +7.14
  Korean won             1130.80   1207.70  +6.80
  Baht                   34.500      35.80  +3.77
  Peso                   49.870      49.72  -0.30
  Rupiah                 13295.0     13470  +1.32
  Rupee                  64.090      67.92  +5.98
  Ringgit                4.343      4.4845  +3.26
  Yuan                   6.896      6.9467  +0.74

 (Reporting by Anusha Ravindranath in Bengaluru; Editing by Kim

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