June 15, 2018 / 6:38 AM / in 10 months

EM ASIA FX-Asian currencies dip as dollar firms more on ECB's cautious stance

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    June 15 (Reuters) - Asian currencies fell on Friday as the
dollar strengthened after a cautious European Central Bank
signalled that any interest rate hike is still distant.
    Except for Thailand, Southeast Asian financial markets were
closed on Friday for public holidays.
    On Thursday, the ECB said it will end its massive bond
purchase scheme by the end of this year, as expected, but the
central bank also indicated it would keep interest rates steady
at least through the summer of 2019.
    The ECB's moves contrasted with those of the Federal
Reserve, which one day earlier increased U.S. rates and
signalled there could be two more hikes this year. 
    The dollar index, measuring it against a basket of
six major peers, gained about 0.2 percent to a two-week high of
94.973, after rallying more than 1 percent the previous day.
    Also, investors betting on regional currencies braced for
the imposition of U.S. tariffs against China. 
    President Donald Trump has made up his mind to impose
"pretty significant" tariffs and will unveil a list targeting
$50 billion of Chinese goods on Friday, an administration
official said. Beijing has warned that it was ready to respond.

    "Still waiting for the dust to settle on US-China trade
before taking a strong view on local currencies," said Stephen
Innes, head of Asia-Pacific trading for Oanda in a note. 
    "But with the dollar ratcheting higher vs most of G-10, it
would suggest there is Asia FX pain in the making."
     The South Korean won fell nearly 1 percent, at
least partly in reaction to the divergence between Fed and ECB
    The Bank of Korea, which held interest rates steady for a
sixth straight month in May, is seen as unlikely to hike in the
near term given the economy's recent weak performance. 
    China's yuan fell to a near two-week low after the central
bank fixed the official midpoint at the lowest in five months. 
    Weaker-than-expected Chinese activity data for May and U.S.
trade threats also undermined the currency.
    The May data suggests the PBOC "will be in little rush to
match the Fed hike, so expect more yuan weakness to ensue," said
Oanda's Innes.
    The Bank of Japan maintained its ultra-loose monetary policy
on Friday and downgraded its view on inflation in a fresh blow
to its long-held 2 percent price goal, further complicating the
central bank's path to rolling back its crisis-era stimulus.
    The dollar edged up 0.1 percent to 110.720 yen after
rising 0.25 percent the previous day. 
    The Thai baht fell 0.86 percent, while the Indian
rupee fell about 0.5 percent on the day. 
    This week's Fed's moves have prompted fears of new capital
outflows from the region. 
    Foreigners have sold about $900 million worth of Asian
stocks so far this month to take this year's tally to about $16
billion, data from seven stock exchanges showed. That compares
with about $20 billion of inflows for all of 2017.
    The following table shows rates for Asian currencies against
the dollar at 0549 GMT.

   Change as of  0549 GMT                               
  Currency                   Latest bid  Previous    Pct
                                              day   Move
  Japan yen                  110.810       110.62  -0.17
  Sing dlr                   1.346         1.3448  -0.05
  Taiwan dlr                 29.996        29.938  -0.19
  Korean won                 1093.200      1083.1  -0.92
  Baht                       32.400         32.12  -0.86
  Rupee                      67.953         67.62  -0.49
  Yuan                       6.414         6.4005  -0.21
     * Indonesia, Malaysia,                             
     Philippine markets are                        
         closed for holiday                        
  Change so far in 2018                                 
  Currency                   Latest bid  End 2017    Pct
  Japan yen                  110.810       112.67  +1.68
  Sing dlr                   1.346         1.3373  -0.61
  Taiwan dlr                 29.996        29.848  -0.49
  Korean won                 1093.200     1070.50  -2.08
  Baht                       32.400         32.58  +0.56
  Peso                       53.290         49.93  -6.31
  Rupiah                     13925.000      13565  -2.59
  Rupee                      67.953         63.87  -6.01
  Ringgit                    3.984         4.0440  +1.52
  Yuan                       6.414         6.5069  +1.45
 (Reporting by Patturaja Muruga in Bengaluru; Additional
reporting by Gaurav Dogra; Editing by Richard Borsuk)
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