June 1, 2018 / 5:47 AM / 21 days ago

EM ASIA FX-Asian currencies cautious as U.S. tariffs rekindle trade war fears

    * China's yuan down for a third week
    * Indian rupee up after strong Q4 GDP
    * Indonesia closed for holiday

 (Adds text, updates prices)
    By Susan Mathew
    June 1 (Reuters) - Asian currencies wobbled in cautious
trade on Friday as Washington's decision to impose trade tariffs
on metal imports from key allies revived the risk of a global
trade war, prompting investors to more into safer assets.
    Canada, Mexico and the European Union swiftly responded with
retaliatory tariffs on U.S. imports after Commerce Secretary
Wilbur Ross announced a 25 percent tariff on steel imports and
10 percent tariff on aluminium imports. 
    The dollar index which measures the greenback against
six major rivals was up 0.2 percent to 94.183 at 0515 GMT.
    Most regional currencies softened, but the Taiwan dollar
 and the Indian rupee rose, with
stronger-than-expected India quarterly growth data adding to
bets of a rate hike in coming months. 
    The Thai baht was little changed after annual
inflation growth came in at a 16-month highs, beating estimates
and above the previous month's clip.
    The 1.49 percent rise, however, was within the central
bank's 1-4 percent target inflation range, and analysts don't
expect a rate hike in its next monthly meet.
    The Chinese yuan slipped and looked set to post a
weekly loss for a third straight session. Data showed that
China's manufacturing sector expanded at a steady pace in May as
a pick up in production and domestic business offset a second
month of declines in new export orders, a private survey showed
on Friday.
    Financial markets in Indonesia were closed for a local
holiday. On Thursday, the rupiah had gained  after a
second rate hike by the central Bank on Wednesday. A Reuters
poll showed that a third hike may be in the offing this year.

   
    INDIAN RUPEE 
    The rupee rebounded after data released late on Thursday
showed the Indian economy grew 7.7 percent year-on-year in
January-March, its quickest pace in nearly two years driven by
higher growth in manufacturing, the farm sector and
construction.
    "The positive economic outlook will help take the sting from
recent political developments, including the latest by-election
results," DBS Group Research said in a note.
    "Backed by strong growth, higher core inflation and a need
to prioritise financial stability, we expect the Reserve Bank of
India's monetary policy committee to sound hawkish and
pre-emptively raise the repo rate by 25bp rate hike on 6 June."
    But the note added that an aggressive hiking cycle is
unlikely given the resolution of banks' bad assets is slow. 
    The rupee was on track to log its biggest weekly gain since
early April. Prior to the robust GDP data, most economists had
expected a rise in August.
    
    SOUTH KOREAN WON
    The South Korean won climbed despite a mixed bag
of economic data.
    A private manufacturing survey showed that South Korea's
factory activity contracted for the third month in a row in May,
prompting companies to cut staff at the fastest pace in almost a
decade.
    Meanwhile, government data showed that South Korea, a
leading suppliers of smartphones, displays and cars, saw a sharp
rebound in exports in May.
    The won looked set to snap two weeks of loss and post a
weekly gain. 
    
    CURRENCIES VS U.S. DOLLAR
 Change on the day at 0515 GMT                  
 Currency             Latest bid  Previous day  Pct Move
 Japan yen            109.070     108.81        -0.24
 Sing dlr             1.340       1.3374        -0.16
 Taiwan dlr           29.878      29.980        +0.34
 Korean won           1075.600    1077.7        +0.20
 Baht                 32.050      32.02         -0.09
 Peso                 52.587      52.541        -0.09
 Rupee                67.255      67.41         +0.22
 Ringgit              3.982       3.978         -0.10
 Yuan                 6.417       6.4070        -0.15
                                                
 Change so far in                               
 2018                                           
 Currency             Latest bid  End 2017      Pct Move
 Japan yen            109.070     112.67        +3.30
 Sing dlr             1.340       1.3373        -0.17
 Taiwan dlr           29.878      29.848        -0.10
 Korean won           1075.600    1070.50       -0.47
 Baht                 32.050      32.58         +1.65
 Peso                 52.587      49.977        -4.96
 Rupiah*              13890.000   13565         -2.34
 Rupee                67.255      63.87         -5.03
 Ringgit              3.982       4.0440        +1.56
 Yuan                 6.417       6.5069        +1.41
 *As of close on Thursday 

 (Reporting by Susan Mathew in Bengaluru; Editing by Kim
Coghill)
  
 
 
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