January 12, 2018 / 6:27 AM / 5 months ago

EM ASIA FX-Asian currencies broadly firmer as dollar slumps

 (Adds text, updates prices)
    By Aditya Soni
    Jan 12 (Reuters) - Asian currencies were broadly firmer on
Friday, as the dollar slumped in the wake of weak factory
inflation data and hawkish comments from the European Central
Bank.
    The euro firmed against the dollar on Thursday after minutes
of the ECB's December meeting suggested that policymakers could
soon start preparing markets for the end of the central bank's
massive stimulus scheme.
    Meanwhile, U.S. producer prices in December fell for the
first time in nearly 1-1/2 years amid declining costs for
services, which could temper expectations that inflation will
accelerate in 2018. That further added to weakness in the
dollar. 
    "The U.S. dollar was hammered on the back of mildly hawkish
European Central Bank minutes and a big miss on U.S. December
PPI which fell for the first time in 16 months," said Greg
McKenna, chief market strategist at CFD and FX provider
AxiTrader, in a note.
    The Korean won led gains among regional
currencies, firming 0.8 percent. However, the won was on track
for its first weekly loss in five weeks.
    The Malaysian ringgit strengthened 0.4 percent and
was on track to end the week 0.6 percent higher.
    The Indian rupee firmed 0.2 percent, ahead of the release of
inflation data later in the day. 
    India's retail inflation likely rose to a 17-month high in
December, boosted by increased prices for some foods and the
impact of higher pay for government employees, a Reuters poll
showed.
    A pick-up in inflation could push the central bank to
tighten monetary policy, as India's central bank restated a
neutral stance in December but said that "all possibilities are
on the table" depending on how price pressures and growth pan
out.
    
    BAHT   
    The Thai baht strengthened 0.3 percent, and was on
track to end the week 1 percent higher, the best among regional
currencies. 
    Thailand expects to receive investment proposals of 720
billion baht ($22.56 billion) this year, up 12 percent from
2017, the investment promotion agency said on Friday.

    The nation's solid fundamentals and continued bond portfolio
inflows continue to support the rise of the baht, said Qi Gao,
FX Strategist (EM Asia) at Scotiabank.
    
    YUAN  
    The Chinese yuan strengthened 0.3 percent, after
data showed China's December exports beat analyst estimates and
the trade surplus rose to $54 billion, the highest since January
2016.
    Exports from the world's second-largest economy beat
forecasts, up 10.9 percent from a year earlier, while imports
missed market expectations, rising only 4.5 percent, official
data showed.
    Chang Wei Liang, FX strategist at Mizuho Bank, said that
despite the softening in import numbers, exports were in line
with expectations and the trade balance blew past market
forecasts. This could offer incremental support for the yuan
given that exporters are likely to keep a bid on the yuan for
now.     
    
    ASIAN CURRENCY POSITIONING
    Investors raised bullish bets on most Asian currencies over
the last three weeks, as the dollar was hit by uncertainty over
the pace of U.S. rate increases, the euro rally and possible
tapering of Japanese stimulus.
    Among regional currencies, long positions on the Indian
rupee reached its highest since August 2017, while the yuan saw
bullish positions being raised to their most since Sept. 9.
   
    The following table shows rates for Asian currencies against
the dollar on Friday.
    
 CURRENCIES VS U.S.                                     
   DOLLAR                                               
 Change on the day at   0620 GMT                        
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    111.240     111.24        +0.00
 Sing dlr                     1.328       1.3292        +0.08
 Taiwan dlr                   29.599      29.605        +0.02
 Korean won                   1064.000    1072          +0.75
 Baht                         31.900      32            +0.31
 Peso                         50.300      50.36         +0.12
 Rupiah                       13360.000   13397         +0.28
 Rupee                        63.530      63.66         +0.20
 Ringgit                      3.970       3.985         +0.38
 Yuan                         6.478       6.4978        +0.31
                                                        
 Change so far                                          
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    111.250     112.67        +1.28
 Sing dlr                     1.328       1.3373        +0.69
 Taiwan dlr                   29.599      29.848        +0.84
 Korean won                   1064.000    1070.50       +0.61
 Baht                         31.900      32.58         +2.13
 Peso                         50.300      49.93         -0.74
 Rupiah                       13360.000   13565         +1.53
 Rupee                        63.530      63.87         +0.54
 Ringgit                      3.970       4.0440        +1.86
 Yuan                         6.478       6.5069        +0.45
 
 (Reporting by Aditya Soni in Bengaluru; Editing by Jacqueline
Wong)
  
 
 
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