August 22, 2017 / 6:48 AM / a month ago

EM ASIA FX-Asian currencies edge higher on more defensive dollar

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Aug 22 (Reuters) - Asian currencies edged up on Tuesday,
with the dollar in a more defensive stance, but analysts said
regional currencies' short-term fate could be decided by the
annual central banking conference in Jackson Hole this week.
    The dollar index inched up after falling as much as
half a percent the previous day, easing further off three-week
highs struck last Wednesday. The greenback has come under
pressure from North Korea tensions and also tepid U.S. inflation
figures that have cast doubt on further monetary tightening. 
    "Asian currency movements will depend on what Federal
Reserve Chair Janet Yellen and European Central Bank President
Mario Draghi will speak in the meeting," said Qi Gao, Asia FX
Strategist at Scotiabank.
    He added that if they mention more about balance-sheet
widening and exiting monetary stimulus, then we could see
emerging Asian currencies decline.
    "But if they sound a bit dovish, we will see a modest risk-
on sentiment after the meeting."
    Sim Moh Siong, FX strategist at Bank of Singapore, said
while there is no expectation of a new policy message from
Draghi, the same cannot be said for Yellen.
    "There is a mixed view right now whether Yellen would send a
message in line with FOMC minutes, or send a message in line
with what Dudley has said, which is more hawkish in nature," he
said.
    "If we see a message from Yellen that despite low inflation
in the U.S, the Fed is still set on tightening path, it could
provide some support for the dollar against the Asian
currencies."
    On Tuesday, the South Korean won was up more than
a quarter of a percent, tracking strong gains in the domestic
equities market.
    The Philippine peso edged up after 10 successive
sessions of declines. On Monday, the central bank warned traders
that it would intervene in the currency market to curb
speculation, adding that it expects the peso to stabilise
following its sharp slide.
    China's yuan firmed after the central bank set
the midpoint at its firmest in 11 months.
    Indonesia's rupiah too edged higher ahead of the
central bank's policy meeting later on Tuesday. A Reuters poll
has forecast the policy rate will likely remain unchanged
despite weak consumption.
    Except for the peso, all other Asian currencies have risen
this year. The Thai baht and Japanese yen have
posted more than seven percent gains against the dollar, while
the Singapore dollar, South Korean won and Taiwan dollar
 have all firmed more than six percent.
    However, some analysts said regional currencies' gains in
the coming months will be limited.
    "My thinking is that, the best days for Asian currencies are
probably behind us," said Bank of Singapore's Siong.
    "Going forward I expect moderate weakness in Asian
currencies against the dollar, mainly because there is a
possibility of a mini dollar rally".
    
    THAI BAHT
    The Thai baht inched up against the dollar
following strong GDP data on Monday.
    Thailand's economy grew 3.7 percent on year in the second
quarter, the fastest clip in over four years.
    "Stronger-than-expected GDP growth will be supportive for
the Thai baht," said Scotiabank's Gao.
    "Meanwhile an excessively strong Thai baht is not in the
local regulator's interest." 
    Thailand's central bank said on Monday it had observed
occasional increases in the volume of foreign exchange
transactions and might consider extra measures to limit
speculation in the baht
    
The following table shows rates for Asian currencies against the
dollar at 0554 GMT.
    CURRENCIES VS U.S. DOLLAR
    
   Change on the                                          
  day at   0554                                  
       GMT                                       
  Currency            Latest bid   Previous day   Pct Move
  Japan yen        109.260               108.97      -0.27
  Sing dlr         1.361                 1.3603      -0.01
  Taiwan dlr       30.298                30.328      +0.10
  Korean won       1134.600                1139      +0.39
  Baht             33.240                33.259      +0.06
  Peso             51.410                 51.49      +0.16
  Rupiah           13335.000              13348      +0.10
  Rupee            64.120                 64.13      +0.02
  Ringgit          4.280                 4.2855      +0.13
  Yuan             6.658                 6.6630      +0.08
                                                          
  Change so far                                           
 in 2017                                         
  Currency         Latest bid     End 2016        Pct Move
  Japan yen        109.260               117.07      +7.15
  Sing dlr         1.361                 1.4490      +6.50
  Taiwan dlr       30.298                32.279      +6.54
  Korean won       1134.600             1207.70      +6.44
  Baht             33.240                 35.80      +7.70
  Peso             51.410                 49.72      -3.29
  Rupiah           13335.000              13470      +1.01
  Rupee            64.120                 67.92      +5.93
  Ringgit          4.280                 4.4845      +4.78
  Yuan             6.658                 6.9467      +4.34
 

 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by
Jacqueline Wong)
  
 
 

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