November 15, 2018 / 6:19 AM / 25 days ago

EM ASIA FX-Asian currencies firm on China-U.S. trade hopes; peso in focus

 (Adds text, updates prices)
    Nov 15 (Reuters) - Asian currencies firmed on Thursday on
news that China has delivered a written response to U.S. trade
demands, raising hopes the two sides will begin negotiations to
bring an end to their trade war.
    The Korean won led gainers after Reuters reported
China had responded to U.S. demands for wide-ranging trade
reforms, citing three U.S. government sources.
    The sources gave no further details on the content of the
response, and it was unclear if it contained concessions that
would satisfy U.S. President Donald Trump's demands for change.
But global investors have been heartened in recent days that the
two sides have at least resumed informal discussions at various
levels.
    "It appears China is more willing to consider issues raised
by the U.S. than in the past," said Chang Wei Liang, FX
strategist at Mizuho Bank.
    Chang said investor confidence was also bolstered after
British Prime Minister Theresa May won the backing of her senior
ministers for a draft European Union divorce deal on Wednesday,
though she now faces the much more perilous struggle of getting
parliament to approve it.
    The positive sentiment was also aided by a softer greenback,
as the dollar index reacted to rallies in the euro and
sterling, which together constitute around 70 percent of the
weight in the index. 
    The Philippine peso and the Indian rupee
gained as much as 0.4 percent each, while the Indonesian rupiah
 strengthened as much as 0.3 percent.
    Both the peso and the rupee rose for a third successive
session.
    The Chinese yuan gained as much as 0.2 percent
while the Malaysian ringgit edged up 0.1 percent.
    Currency markets were awaiting central bank policy decisions
later in the day in Indonesia (0700 GMT) and the Philippines
(0800 GMT).
    Indonesia's central bank is likely to hold its benchmark
interest rate, a Reuters poll showed, though some analysts
expect December to bring this year's sixth rate hike.

    
    PHILIPPINE PESO
    In a Reuters poll, analysts were nearly evenly split on
whether the Bangko Sentral ng Pilipinas will raise interest
rates for the fifth time this year to tackle stubbornly high
inflation, after the economy grew at its slowest annual pace in
more than three years in the third quarter.   
    "Although external stability seems to be improving with
falling bond yields and peso rebounding alongside other
beaten-down currencies, pressure from tightening global
liquidity condition may return given its large (and widening)
trade deficit," said Mizuho Bank analysts in a note.
    
    THAI BAHT    
    Thailand's central bank held its benchmark interest rate
steady on Wednesday as expected, but a widening split on the
decision-making committee bolstered views that next month it
could tighten policy for the first time in more than seven
years.
    "The 4-3 vote and comment that 'the need for accommodative
monetary policy would be gradually reduced' seem not enough to
take up rates, as a minority in the market had expected a hike.
USD/THB went up as a response, reflecting market focusing more
on the decision itself," said Frances Cheung, head of macro at
Westpac. 
    "However, the decision is unlikely to have a long-lasting
impact on the Thai baht, which should stay resilient supported
by external surplus." 
    
    The following table shows rates for Asian currencies against
the dollar at 0613 GMT.
    CURRENCIES VS U.S. DOLLAR
  
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    113.520     113.61        +0.08
 Sing dlr                     1.376       1.3789        +0.23
 Taiwan dlr                   30.861      30.932        +0.23
 Korean won                   1129.800    1134.3        +0.40
 Baht                         32.890      32.985        +0.29
 Peso                         52.850      53.09         +0.44
 Rupiah                       14765.000   14785         +0.14
 Rupee                        72.130      72.31         +0.24
 Ringgit                      4.189       4.1945        +0.13
 Yuan                         6.940       6.9500        +0.15
                                                        
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    113.520     112.67        -0.75
 Sing dlr                     1.376       1.3373        -2.80
 Taiwan dlr                   30.861      29.848        -3.28
 Korean won                   1129.800    1070.50       -5.25
 Baht                         32.890      32.58         -0.94
 Peso                         52.850      49.93         -5.53
 Rupiah                       14765.000   13565         -8.13
 Rupee                        72.130      63.87         -11.45
 Ringgit                      4.189       4.0440        -3.46
 Yuan                         6.940       6.5069        -6.23
 


 (Reporting by Aby Jose Koilparambil in Bengaluru; Additional
reporting by Devika Syamnath in Bengaluru; Editing by Kim
Coghill)
  
 
 
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