August 1, 2019 / 6:45 AM / 2 months ago

EM ASIA FX-Asian currencies ease as Fed's guarded outlook lifts dollar

    * Chinese yuan softens to a 6-week low
    * S. Korean won eases as much as 0.7%; July exports -11.0%

 (Adds text, updates prices)
    By Niyati Shetty
    Aug 1 (Reuters) - Asian currencies weakened against the
dollar on Thursday as the U.S. Federal Reserve doused market
expectations of a lengthy easing cycle after it delivered its
first rate cut in over a decade. 
    While the Fed's 25-basis-point rate cut on Wednesday was
widely expected, Chairman Jerome Powell said it was "not the
beginning of a long series of rate cuts", wrong-footing some
traders and lifting the greenback to a two-year high.
    The Indonesian rupiah was one of the hardest hit in
the region, easing 0.5% to 14,085 per dollar. 
    "Against the dovish stances of other central banks, the U.S.
dollar has become a de facto strong currency on monetary policy
divergences," DBS Bank said in a note. 
    The Chinese yuan lost as much as 0.5% to its
lowest level in six weeks. The country's central bank kept its
main policy rates on hold on Thursday, opting not to follow the
Fed cut.
    Not helping the yuan was the conclusion of brief trade talks
between the United States and China on Wednesday with little
sign of progress, prolonging an uneasy truce in the year-long
trade row.
    The fallout from the dispute continued to spread across 
Asia with factory activity in the region contracting further in
July. Policymakers worry a sustained downturn in world trade
could tip the global economy into a recession, leaving central
banks with depleted ammunition to fight off the pressure.

    The Indian rupee the Malaysian ringgit and
the Thai baht each softened about 0.4%.
    The won weakened as much as 0.7% to 1,191.10 a
dollar, a more than 2-month low as Asia's fourth largest economy
showed further signs of trouble. 
    The country's exports tumbled for an eighth straight month
in July, with persistently weak global demand and an escalating
dispute with Japan painting an increasingly gloomy picture for
South Korea.
     And, the row showed no signs of an imminent resolution.
Japan is expected to give approval for the removal of South
Korea from its list of countries with minimum trade restrictions
as early as Friday.
    A private survey also showed manufacturing activity
contracted in July to its lowest in five months.
    The following table shows rates for Asian currencies against
the dollar at 0547 GMT.
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              109.180     108.74        -0.40
 Sing dlr               1.375       1.3735        -0.12
 Taiwan dlr             31.144      31.096        -0.15
 Korean won             1186.700    1183.1        -0.30
 Baht                   30.830      30.72         -0.36
 Peso                   51.090      50.98         -0.22
 Rupiah                 14085.000   14012         -0.52
 Rupee                  69.055      68.79         -0.38
 Ringgit                4.143       4.125         -0.42
 Yuan                   6.900       6.8840        -0.23
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              109.180     109.56        +0.35
 Sing dlr               1.375       1.3627        -0.91
 Taiwan dlr             31.144      30.733        -1.32
 Korean won             1186.700    1115.70       -5.98
 Baht                   30.830      32.55         +5.58
 Peso                   51.090      52.47         +2.70
 Rupiah                 14085.000   14375         +2.06
 Rupee                  69.055      69.77         +1.04
 Ringgit                4.143       4.1300        -0.30
 Yuan                   6.900       6.8730        -0.39
 (Reporting by Niyati Shetty in Bengaluru
Editing by Shri Navaratnam)
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