August 31, 2018 / 6:52 AM / 2 months ago

EM ASIA FX-Asian currencies dip on Trump's trade war threats

 (Adds Indian rupee, Indonesian rupiah, analyst comments)
    By Patturaja  Murugaboopathy 
    Aug 31 (Reuters) - Asian currencies weakened on Friday as
concerns mounted that the United States would impose fresh
tariffs on China next week, while sharp declines in the
Argentina peso also soured risk sentiment. 
    U.S. President Donald Trump said he was ready to impose more
tariffs on $200 billion worth of goods from China as soon as the
public comment period on the plan ends next week, Bloomberg News
reported.
    The world's two largest economies have applied tariffs to
$50 billion of each other's goods and the proposed new U.S.
measures would mean about half of Chinese imports will be
charged with tariffs by the United States.
    "If a full-blown trade war kicks off the U.S. dollar is
likely to gain," said Greg McKenna, chief market strategist at
CFD and FX provider AxiTrader.
    The greenback was likely to find support in the current
environment, with sustainable momentum in the U.S. economy and
the Federal Reserve lifting rates, he said.
    Sharp declines in the Argentina peso and Turkish lira
were a drag on Asian currencies, especially those with higher
external deficits. 
    The Argentina peso fell 13.12 percent on Thursday despite
its central bank boosting interest rates as investors doubted
President Mauricio Macri's ability to tackle the economic
crisis.
    The Indian rupee hit a new low of 71 per dollar on
Friday, while the Indonesian rupiah was hovering near a
20-year low. 
    Traders said India's central bank was likely sporadically
selling dollars through state-run banks to prevent a sudden
sharp fall, but they didn't expect any major intervention.
 
    South Korea's won fell 0.4 percent after the
central bank kept monetary policy unchanged on Friday and
dampened expectations of further policy tightening this year.

    China's yuan was set for its fifth consecutive
monthly decline, though August losses were marginal compared
with a 3 percent decline in both June and July. The central
bank's move to revive a "counter-cyclical factor" in its daily
fixing propped up the yuan this month. 
    Analysts said they expected regional currencies to feel more
pressure in September due to the trade dispute between the
United States and China, and economic crises in Argentina and
Turkey. 
    "With heightened trade tensions threatening to erupt into a
full-blown trade war, the region is on alert for disorderly
capital outflows could lead to financial instability, especially
in countries that have high external debt levels," DBS said in a
research note.
    DBS also pointed to Malaysia "where short-term external debt
is almost as much as foreign reserves, amidst a weakening growth
outlook after its May election".
    Malaysian markets were closed on Friday for a national
holiday.
    The following table shows rates for Asian currencies against
the dollar at 0559 GMT.
    CURRENCIES VS U.S. DOLLAR

    
   Change as of  0559                            
          GMT                               
  Currency                Latest  Previous    Pct
                             bid       day   Move
  Japan yen              110.980    110.96  -0.02
  Sing dlr               1.368      1.3674  -0.03
  Taiwan dlr             30.714     30.711  -0.01
  Korean won             1113.00    1108.6  -0.40
                         0                  
  Baht                   32.720      32.69  -0.09
  Peso                   53.470      53.43  -0.07
  Rupiah                 14725.0     14685  -0.27
                         00                 
  Rupee                  70.955      70.74  -0.30
  Yuan                   6.827      6.8440  +0.25
 *Malaysian markets are closed                   
 for National day                           
  Change so far in 2018                          
  Currency               Latest   End 2017    Pct
                         bid                 Move
  Japan yen              110.980    112.67  +1.52
  Sing dlr               1.368      1.3373  -2.23
  Taiwan dlr             30.714     29.848  -2.82
  Korean won             1113.00   1070.50  -3.82
                         0                  
  Baht                   32.720      32.58  -0.43
  Peso                   53.470      49.93  -6.62
  Rupiah                 14725.0     13565  -7.88
                         00                 
  Rupee                  70.955      63.87  -9.99
  Ringgit                4.108      4.0440  -1.56
  Yuan                   6.827      6.5069  -4.69
 
 (Reporting by Patturaja Murugaboopathy in Bengaluru
Editing by Darren Schuettler)
  
 
 
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