September 21, 2018 / 5:57 AM / 7 months ago

EM ASIA FX-Asian currencies edge up as markets reassess trade war disruptions

 (Adds analyst comments, price moves and graphic)
    By Patturaja  Murugaboopathy 
    Sept 21 (Reuters) - Asian currencies strengthened for the
third consecutive day on Friday, supported by a weaker dollar
and shifting views over how much damage the Sino-U.S. trade war
will inflict on global demand and export-reliant regional
    On Tuesday, Washington imposed 10 percent tariffs on about
$200 billion worth of Chinese imports, while Beijing announced
new retaliatory levies on about $60 billion worth of U.S. goods.
    However, the initial tariff rates imposed by both sides were
lower than expected, with the United States delaying stiffer
duties for another few months, reducing the risk of a sudden,
sharp blow to the global economy from the escalation.   
    The dollar index has fallen more than 1 percent this
week. Analysts said investment flows are being diverted away
from the greenback to its peers such as emerging market
currencies as trade tensions have ebbed.
    "A significant factor in adding to the current run of dollar
weakness is the drop on safe-haven appeal after China suggested
they won't weaponise yuan in a trade war," said Stephen Innes,
head of trading for Asia-Pacific at OANDA in Singapore.
    "Regional risk is very steady supported by thriving global
equity markets, a slightly weaker dollar and a positive glean
that North Korea's leader Kim Jung-un has asked for a second
summit with President Trump."
    Analysts said the reports that China will further reduce
import tariffs for the majority of its trading partners as soon
as next month also supported risk sentiment in the
    "ASEAN nations may benefit from an expansion of trade with
China as trade barriers are reduced, with China possibly
reweighting the importance of the region due to the trade war,"
said Chang Wei Liang, FX strategist at Mizuho Bank.
    The Indian rupee and the Indonesian rupiah
drew comfort from their governments' proposed measures to shore
up their currencies this week. 
    India is considering asking the central bank to offer
dollars directly to oil marketing companies and is likely to
announce curbs on imports of "non-essential" items to stem the
    On Thursday, Indonesia's finance minister said the
government is aiming to persuade exports to keep their earnings
onshore and convert them into local currency. 
    The Indian rupee climbed 0.75 percent on the day
leading the regional currencies gains, followed by the South
Korean won, which rose nearly 0.4 percent.
    China's yuan firmed after the Chinese central bank said it
would issue bills in Hong Kong to allow it better manage
offshore yuan liquidity.
    The Hong Kong dollar advanced about 0.2 percent
against the dollar in early Friday trade, hitting its highest
levels since late February.
    Data from regional central banks showed their foreign
exchange reserves have fallen in the past three months,
reflecting their efforts to prevent declines in their
    Regional currencies have fallen sharply on concerns over
Sino-U.S. trade war and fears of contagion from Turkey and other
volatile emerging markets in the last few months. 
    "Further declines in most AXJ foreign reserves are likely
especially as currency defence may take on added significance
ahead of critical general/presidential elections in Thailand,
Indonesia and India next year," said MUFG Bank in a report.
    A recent Reuters poll showed that bearish bets on Asian
currencies have risen over the last two weeks.
    The following table shows rates for Asian currencies against
the dollar at 0522 GMT.
   Change as of  0522                           
  Currency               Latest  Previous    Pct
                            bid       day   Move
  Japan yen             112.760    112.48  -0.25
  Sing dlr              1.364      1.3644  +0.06
  Taiwan dlr            30.734     30.795  +0.20
  Korean won            1116.80    1120.4  +0.32
  Baht                  32.380      32.38  +0.00
  Peso                  54.020     54.075  +0.10
  Rupiah                14825.0     14840  +0.10
  Rupee                 71.870      72.37  +0.70
  Ringgit               4.128       4.135  +0.17
  Yuan                  6.841      6.8460  +0.07
  Change so far in                              
  Currency              Latest   End 2017    Pct
                        bid                 Move
  Japan yen             112.760    112.67  -0.08
  Sing dlr              1.364      1.3373  -1.93
  Taiwan dlr            30.734     29.848  -2.88
  Korean won            1116.80   1070.50  -4.15
  Baht                  32.380      32.58  +0.62
  Peso                  54.020      49.93  -7.57
  Rupiah                14825.0     13565  -8.50
  Rupee                 71.870      63.87  -11.1
  Ringgit               4.128      4.0440  -2.03
  Yuan                  6.841      6.5069  -4.89
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Additional
Reporting by Gaurav Dogra; Editing by Kim Coghill)
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