August 23, 2017 / 6:54 AM / a year ago

EM ASIA FX-Asian currencies inch up on receding risk aversion

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Aug 23 (Reuters) - Asian currencies were steady on
Wednesday, supported by improving risk sentiment due to easing
concerns over geopolitical risks in the region.
    The dollar index, which tracks the greenback against
a basket of six major currencies, was flat on the day at 93.513
after it gained 0.5 percent the previous session.
    "Overall theme of receding risk aversion due to either U.S.
politics or U.S.-North Korea situation, has boded well for risk
sentiment, buoying equities and perhaps supporting inflows into
the region," said Vishnu Varathan, head of economics and
strategy at Mizuho Bank in Singapore.
    "Apart from China, most of the equity markets seem to be up.
That is acting as a backstop for Asian currencies. 
    The South Korean won led regional gains, up more
than a quarter of a percent against the dollar, while the
Philippine peso too edged up.
    The Indonesian rupiah inched down despite a surprise
rate cut by Bank Indonesia on Tuesday to stoke lending and
    With its first rate cut since October, the Indonesian
central bank became the second major Asian economy to cut after
    "The 25 basis points rate cut is unlikely to matter much at
this juncture. We still see downside risks to our 2018 GDP
growth forecast," said DBS bank in a report.
    "Interesting to see if Bank Indonesia (BI) may follow
through with another cut(s) between now and when the U.S. Fed is
expected to hike rates in December."
    Capital Economics and ING expect one more cut this year
while the latter expects another two more cuts in 2018.
    Scotiabank said it expected more bond inflows to Indonesia
after the rate cut in a report.
    The Thai baht edged lower after its custom-cleared
annual exports fell short of expectations, while the Malaysian
ringgit too inched down after Malaysia's consumer price
index rose at a slower pace for the fourth month in a row.

    Overall, market participants keenly look forward to a
meeting of global central bankers in the United States starting
later this week for further cues for regional currencies.
    On Tuesday, the central bank said Malaysia's gross
international reserves rose to $100.4 billion as of mid-August,
the highest since July 2015.
    Analysts said the ringgit's strong performance this year
amid dollar weakness helped shore up the country's reserves.
    "We have seen strong porfolio inflows supporting and
building into the reserves," said Mizuho Bank's Varathan.
    "The BNM did not need to intervene as the dollar trend has
been in favour." 
    Malaysian bond markets attracted about $3.8 billion of
foreign inflows in the second quarter bolstered by regulations
allowing non-bank entities to have a net forward position of up
to 100 percent of their underlying assets and manage an
additional 25 percent of foreign exchange exposure, from May 2.

    The previous two quarters saw steep outflows as the central
bank had asked foreign banks to stop trading ringgit
non-deliverable forwards (NDFs), to hedge their exposure to the
    The following table shows rates for Asian currencies against
the dollar at 0552 GMT.
   Change on the                                     
  day at   0552                              
  Currency         Latest bid  Previous day  Pct Move
  Japan yen        109.420           109.56     +0.13
  Sing dlr         1.362             1.3622     +0.01
  Taiwan dlr       30.289            30.300     +0.04
  Korean won       1130.700          1133.8     +0.27
  Baht             33.290             33.22     -0.21
  Peso             51.190             51.24     +0.10
  Rupiah           13348.000          13341     -0.05
  Rupee            64.130             64.10     -0.05
  Ringgit          4.280              4.279     -0.02
  Yuan             6.662             6.6620     +0.00
  Change so far                                      
 in 2017                                     
  Currency         Latest bid  End 2016      Pct Move
  Japan yen        109.420           117.07     +6.99
  Sing dlr         1.362             1.4490     +6.38
  Taiwan dlr       30.289            32.279     +6.57
  Korean won       1130.700         1207.70     +6.81
  Baht             33.290             35.80     +7.54
  Peso             51.190             49.72     -2.87
  Rupiah           13348.000          13470     +0.91
  Rupee            64.130             67.92     +5.91
  Ringgit          4.280             4.4845     +4.78
  Yuan             6.662             6.9467     +4.28

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