April 12, 2018 / 5:12 AM / 3 months ago

EM ASIA FX-Asian currencies ease as Trump warns of strikes on Syria

    * Korean won drags most among EM Asia FX
    * Syria tensions weigh on riskier assets
    * Singapore's central bank decision in focus 

 (Adds text, updates prices)
    By Christina Martin
    April 12 (Reuters) - Emerging Asian currencies softened on
Thursday after U.S. President Donald Trump warned of imminent
military action in Syria, prompting investors worldwide to sell
riskier assets.
    Trump warned Russia that missiles "will be coming" in Syria,
and lambasted Moscow for standing by Syrian President Bashar
al-Assad after a suspected poison gas attack. 
    With attention on Syria, the U.S. dollar did not receive
much support from Federal Reserve meeting minutes, which showed
that all of the policymakers felt that the U.S. economy would
firm further and that inflation would rise in the coming months.
    "With the war drums quietly beating in the White House,
markets tend to ignore the run-of-the-mill type issues like FOMC
minutes and focus on possible geopolitical escalation fears,"
said Stephen Innes, head of trading in Asia-Pacific for OANDA in
    The Middle East tensions also shifted some focus away from
the U.S.-China trade standoff, sending the dollar index against
a basket of six major currencies slightly lower.    
    All emerging Asian currencies posted losses, with the South
Korean won falling as much as 0.5 percent, making it
the worst performer of the day in the region.
    The Chinese yuan was the second biggest loser,
down as much as 0.2 percent, followed by the Philippine peso
 and the Taiwan dollar, both losing nearly 0.2
    "Chinese regulators continue to flag more steps to open up
China's economy further, which resonated favourably in the
background among all local economies, but possible U.S. military
escalation in the Middle East now has investors shaking in their
boots," said Innes.
    "With global equity market likely to remain sour as
investors move from trade war fires into the geopolitical frying
pan, risk appetite will remain fragile and this will dent
regional currency sentiment." 
    The Thai baht, the Indian rupee and
Malaysia's ringgit all inched down, while the Singapore
dollar erased earlier marginal gains to skid 0.1 percent. 
    The won fell as much as 0.5 percent against the 
dollar and was the biggest drag among Asian currencies. 
    South Korea's central bank held interest rates steady on
Thursday, as expected, with inflation running more slowly than
forecast and exports showing a modest improvement.
    Inflation slowed to 1.3 percent in March from 1.4 percent a
month earlier, cementing a consensus view that any monetary
tightening this year will be gradual.  
    The Singapore dollar crept lower against the dollar on
Thursday, after creeping up slightly in early trade. 
    The city-state's central bank will issue its semiannual
monetary policy statement and data on first-quarter gross
domestic product on Friday.
    According to a Reuters poll, a slim majority of analysts
expect the Monetary Authority of Singapore (MAS) to tighten its
exchange rate-based policy for the first time in six years, with
economic growth solid and the labour market showing signs of
    But some believe heightened U.S.-China trade tensions may
stay the central bank's hand for now. Singapore is a major
supplier of electronics which feed into China's global supply
    "My view is that the MAS is more than cognizant of the trade
war tails risk, and will probably defer this time around. This
view is not in consensus as 9 of 15 economists polled by Reuters
suggest MAS will raise," explained Innes. 
    The following table shows rates for Asian currencies against
the dollar at 0503 GMT.
 Change on the day at   0503 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              106.950     106.78        -0.16
 Sing dlr               1.310       1.3089        -0.05
 Taiwan dlr             29.249      29.201        -0.16
 Korean won             1070.500    1066.3        -0.39
 Baht                   31.170      31.15         -0.06
 Peso                   52.031      51.945        -0.17
 Rupiah                 13770.000   13757         -0.09
 Rupee                  65.380      65.31         -0.11
 Ringgit                3.875       3.873         -0.05
 Yuan                   6.279       6.2662        -0.20
 Change so far in 2018                            
 Currency               Latest bid  End 2017      Pct Move
 Japan yen              106.950     112.67        +5.35
 Sing dlr               1.310       1.3373        +2.12
 Taiwan dlr             29.249      29.848        +2.05
 Korean won             1070.500    1070.50       +0.00
 Baht                   31.170      32.58         +4.52
 Peso                   52.031      49.93         -4.04
 Rupiah                 13770.000   13565         -1.49
 Rupee                  65.380      63.87         -2.31
 Ringgit                3.875       4.0440        +4.36
 Yuan                   6.279       6.5069        +3.64

 (Reporting By Christina Martin in Bengaluru)
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