March 26, 2018 / 6:59 AM / a month ago

EM ASIA FX-Asian currencies firm after U.S. exempts S. Korea from steel tariffs

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    March 26 (Reuters) - Most emerging Asian currencies edged
higher on Monday as trade tensions faded slightly after South
Korea was exempted from U.S. steel tariffs and a media report
said quiet negotiations between China and the United States have
    Fears of a trade war have mounted this month after U.S.
President Donald Trump slapped hefty tariffs on steel and
aluminium imports, and then specifically targeted China by
announcing plans for tariffs on up to $60 billion of Chinese
    The Wall Street Journal, citing sources, reported on Monday
that the two countries have quietly started negotiating to
improve U.S. access to Chinese markets.
    The media report "has somewhat brought a mild relief to
markets," Maybank said in a note.
    "Trade war could pose risks to synchronized economic
recovery and derail broad dollar downtrend," it said, adding
that a downtrend would "resume on unwinding of trade tensions".
     Emerging currencies also received a boost from the news the
United States had agreed to exempt South Korea from its steel
    South Korea is the third-largest steel exporter to the
United States and the world's top importer of Chinese steel.
    The Malaysian ringgit and Singapore dollar led
regional gainers on Monday, each advancing more than 0.25
percent against the dollar.
    Malaysia and Singapore play a major part of the supply chain
to China's exports to the United States and their currencies are
prone to any disruption in trade between China and U.S. 
    The Philippine peso and Thai baht both
gained about 0.2 percent. 
    China's yuan eased slightly as local companies
stocked up on the greenback.
    Some analysts said tensions around a global trade war could
prompt the Fed to be less aggressive in its tightening path this
    Last week, the Federal Reserve maintained the view that it
would raise interest rate three times in 2018 instead of the
four that some dollar bulls had hoped for.
    Stephen Innes, Asia-Pacific trading head at OANDA, said a
trade war would bring a "big storm" the Fed would have to factor
into its decisions. 
    "We might be back at the old dovish Yellen stage," he added,
referring to former Fed Chair Janet Yellen.
    Innes said currency markets "seem pretty happy taking on a
little bit more risk" at present as there's no indication yet
that the Fed's 2018 rate hike path will get steeper.
    The following table shows rates for Asian currencies against
the dollar at 0610 GMT.
    Change as of                               
      0610 GMT                          
  Currency           Latest   Previous      Pct
                        bid        day     Move
  Japan yen          105.01     104.72    -0.28
  Sing dlr           1.312      1.3152    +0.28
  Taiwan dlr         29.148     29.170    +0.08
  Korean won         1082.5     1082.2    -0.03
  Baht               31.160      31.22    +0.19
  Peso               52.320      52.39    +0.13
  Rupiah             13771.      13780    +0.07
  Rupee              64.905      65.01    +0.15
  Ringgit            3.903       3.915    +0.31
  Yuan               6.314      6.3135    -0.01
  Change so far in                             
  Currency           Latest  End 2017       Pct
                     bid                   Move
  Japan yen          105.01     112.67    +7.29
  Sing dlr           1.312      1.3373    +1.97
  Taiwan dlr         29.148     29.848    +2.40
  Korean won         1082.5    1070.50    -1.11
  Baht               31.160      32.58    +4.56
  Peso               52.320      49.93    -4.57
  Rupiah             13771.      13565    -1.50
  Rupee              64.905      63.87    -1.59
  Ringgit            3.903      4.0440    +3.61
  Yuan               6.314      6.5069    +3.06
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by
Richard Borsuk)
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