August 11, 2017 / 6:06 AM / 10 months ago

EM ASIA FX-Korean won, Philippine peso hit by U.S., N.Korea tensions

    By Hanna Paul
    Aug 11 (Reuters) - Most emerging Asian currencies fell on
Friday on rising risk aversion, with the Korean won and
Philippine peso dropping the most as investors were unnerved by
fiery rhetoric between the United States and North Korea.
    U.S. President Donald Trump warned the reclusive communist
country to stand down on its threat to strike the U.S. Pacific
territory of Guam saying it would prompt "an event the likes of
which nobody's seen before" after Pyongyang stepped up its
threats against the United States.
    "This situation is beginning to develop into this
generation's Cuban missile crisis moment, with recent leaked
intelligence reports alleging that North Korea now has
miniaturised its nuclear warheads, which extends the range of
its missiles, and potentially brings U.S. targets into reach,"
ING's chief Asia economist Robert Carnell said in a research
    "While the U.S. President insists on ramping up the war of
words, there is a decreasing chance of any diplomatic solution."
    President Trump proclaimed that China, being North Korea's
strategic trade partner and ally, should step in and stated that
"I think China can do a lot more, yes...and I think China will
do a lot more."
    A Chinese state-run newspaper said China should embody a
neutral stance in the situation if North Korea attacks first but
added that if the United States tries to overthrow the North's
government, China will stop them.
    The Chinese yuan fell 0.3 percent and is poised
for its steepest one-day drop in nearly seven months.
    The won slipped up to 0.5 percent on its third
day in the red. Data showing import prices in South Korea in
July grew at their fastest pace in three months failed to add
    Amid the escalating geopolitical tension, the yen
headed for a fourth-day of gains. The yen has been broadly
perceived as a safe haven currency because Japan is the world's
biggest creditor country and investors there have tended to
repatriate funds in times of crisis.
    Despite the current preoccupation with risk aversion,
Emmanuel Ng from OCBC Research, said: "Beyond a tipping point,
the yen may be expected to lose its safe haven status if
U.S.-North Korean tensions continue to escalate." 
    The Philippine peso was on track for its 5th day
of decline, dropping as much as 0.6 percent to its weakest since
August 2006.
    The currency is headed for its worst week since June 2013.
    The Philippine central bank said on Friday it was
"constantly monitoring" developments in the foreign exchange
market for any excessive volatility.
    "We're constantly monitoring peso developments for excessive
short-term volatility not consistent with underlying economic
fundamentals," Bangko Sentral ng Pilipinas Governor Nestor
Espenilla told reporters.

    The Singapore dollar steadied on Friday after data
showed the city-state's economy grew 2.2 percent in April-June,
way above analysts estimates of 0.5 percent suggesting a
balanced recovery for the trade-reliant economy.
    Singapore and other Asian economies which are highly
dependent on trade have gained a big boost this year from an
improvement in global demand, particularly for electronics
products and components such as semiconductors.
    The currency is down 0.2 percent for the week and is on
track for its second-straight week of declines.

    The following table shows rates for Asian currencies against
the dollar at 0506 GMT.

  Change on the day at 0506                                    
  Currency                   Latest bid  Previous day  Pct Move
  Japan yen                  108.940            109.2     +0.24
  Sing dlr                   1.363             1.3632     +0.01
  Taiwan dlr                 30.353            30.309     -0.14
  Korean won                 1147.200            1142     -0.45
  Baht                       33.264             33.24     -0.07
  Peso                       51.015            50.795     -0.43
  Rupiah                     13367.000          13333     -0.25
  Rupee                      64.220             64.08     -0.22
  Ringgit                    4.294               4.29     -0.09
  Yuan                       6.669             6.6485     -0.30
  Change so far in 2017                                        
  Currency                   Latest bid  End 2016      Pct Move
  Japan yen                  108.940           117.07     +7.46
  Sing dlr                   1.363             1.4490     +6.30
  Taiwan dlr                 30.353            32.279     +6.35
  Korean won                 1147.200         1207.70     +5.27
  Baht                       33.264             35.80     +7.62
  Peso                       51.015             49.72     -2.54
  Rupiah                     13367.000          13470     +0.77
  Rupee                      64.220             67.92     +5.76
  Ringgit                    4.294             4.4845     +4.44
  Yuan                       6.669             6.9467     +4.17
 (Editing by Jacqueline Wong)
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