January 16, 2018 / 5:28 AM / 6 months ago

EM ASIA FX-Asian currencies fall on investor caution after sharp gains

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Jan 16 (Reuters) - Asian currencies declined on Tuesday as
investors turned a little cautious of adding fresh positions
after the steep gains in regional currencies this year.
   The dollar rose 0.3 percent to 110.85 yen, edging away
from a four-month low of 110.32 yen set on Monday. 
   "I think Asian currencies are in a phase of consolidation
after the significant gains yesterday," said Chang Wei Liang, an
FX strategist with Mizuho Bank 
    "In the near-term, the downside in dollar-Asia is likely to
persist, partly reflecting the positive growth environment," Wei
Liang said.
    He noted the euro was currently providing a tailwind for the
Asian currencies. The euro was up 0.03 percent against
the dollar at 1.2265.
    Technical indicators such as the relative strength index 
(RSI) showed the Indonesian rupiah, Taiwan dollar
, Malaysian ringgit, Thai baht and the
Singapore dollar are overbought.
    After the currencies' solid gains over the past year, some
central banks are expected to intervene in the foreign exchange 
market, weakening currencies to protect exports. 
    Thailand's central bank said late last week it had taken
action when the baht was rising rapidly, moving to reduce the
impact on businesses from a currency hovering near a 3-1/2 year
high against the US dollar.
    The Thai baht edged lower, while the South Korean won
 also declined, dipping nearly a quarter percent on
the day.
    Strong oil prices, however, propped up the Malaysian ringgit
on Tuesday.
    China's yuan slipped despite the People's Bank of
China setting its official yuan midpoint at the highest level in
more than two years.  
    On Monday the yuan surged to its strongest in more than two
years against the dollar, buoyed by the Bundesbank's decision to
include the yuan in its reserves.
    In Europe, comments on Monday from Ardo Hansson, Estonia's
central bank chief and an ECB rate-setter, reinforced the
expectations that the European Central bank (ECB) could end its
2.55 trillion euro bond-buying scheme in one move after
September.
    Some analysts said regional currencies were also affected on
the day due to increased expectations the ECB would wind down
its monetary stimulus.
     Historically, the regional currencies have benefited from
global liquidity provided by the world's leading central banks.
   
    INDIAN RUPEE
    
    The Indian rupee was down 0.31 percent against the
dollar at 63.683, hit by the recent surge in crude oil prices.
    India is the second biggest oil importer in the region after
China. 
    On Monday, government data showed India's December trade
deficit widened to its highest in more than three years as
higher import costs for gold and crude oil outweighed rising
exports.
    
    A Maybank report on Tuesday said rising oil prices and other
inflationary pressures could induce India's central bank to hike
rates sooner than expected.
     "The rupee could be a possible outlier amongst Asian
synchronous recovery," the report said. 
      
    The following table shows rates for Asian currencies against
the dollar at 0448  GMT.
    CURRENCIES VS U.S. DOLLAR
  Change on the day                                 
   at   0448 GMT                          
  Currency             Latest   Previous    Pct Move
                          bid        day  
  Japan yen          110.850      110.52       -0.30
  Sing dlr           1.322        1.3207       -0.08
  Taiwan dlr         29.544       29.542       -0.01
  Korean won         1063.700     1062.7       -0.09
  Baht               31.903        31.89       -0.04
  Peso               50.435        50.37       -0.13
  Rupiah             13334.00   13334.00        0.00
  Rupee              63.660        63.49       -0.27
  Ringgit            3.954         3.954       +0.00
  Yuan               6.440        6.4363       -0.06
                                                    
  Change so far in                                  
 2018                                     
  Currency           Latest    End 2017     Pct Move
                     bid                  
  Japan yen          110.850      112.67       +1.64
  Sing dlr           1.322        1.3373       +1.17
  Taiwan dlr         29.544       29.848       +1.03
  Korean won         1063.700    1070.50       +0.64
  Baht               31.903        32.58       +2.12
  Peso               50.435        49.93       -1.00
  Rupiah             13334.00      13565       +1.73
                     0                    
  Rupee              63.660        63.87       +0.33
  Ringgit            3.954        4.0440       +2.28
  Yuan               6.440        6.5069       +1.03
 
    
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by
Eric Meijer)
  
 
 
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