September 27, 2017 / 6:22 AM / 9 months ago

EM ASIA FX-Asian currencies languish on Yellen comments and foreign outflows

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Sept 27 (Reuters) - Most Asian currencies declined on
Wednesday after Federal Reserve Chair Janet Yellen pressed the
need to continue with rate hikes, lifting the dollar and U.S.
Treasury yields and reducing the appeal of regional currencies.
    Fed Chair Janet Yellen said on Tuesday that the Federal
Reserve needed to continue gradually raising interest rates
despite broad uncertainty about the path of inflation.

    The dollar's index against a basket of six major currencies
 stood at 93.07, near the one-month high it touched on
    "Asian currencies are weaker today largely due to the
stronger greenback overnight on the back of Yellen's more
hawkish comments about U.S. interest rate policy," said Khoon
Goh, head of Asia Research at ANZ.
    "Also helping the U.S. dollar is continued talk about 
potential tax reforms."
     The U.S. administration and Republicans in Congress are due
to announce a tax plan on Wednesday, in which corporate taxes
are expected to be reduced.
     "Material progress with U.S. tax reforms may see a
sustained USD rebound," Maybank said in report.
     Such a rebound would not help regional currencies, which
have been battered in the last few weeks by rising geopolitical
tensions around North Korea.     
     Analysts said foreign investors are leaving regional
equities and bond markets as U.S Treasury yields rose.
    "The (Asian)currencies which will be impacted more will be 
those that have been prime beneficiaries of large foreign
investor inflows," said ANZ's Goh.
    Regional exchange data showed foreign investors have sold
more than $3 billion in shares from India, South Korea and
Taiwan so far this month. These three markets have lured
foreigners since the start of the year, helping their currencies
register strong gains against the dollar.    
    The Indian rupee, South Korean won and
Taiwan dollar, have all declined on the day. 
    China's yuan fell to its weakest level in nearly
a month but recouped its losses as the market grew nervous over
how much further the central bank would allow the currency to
weaken. Earlier in the day, the central bank lowered its
official yuan midpoint CNY=PBOC for the third day in a row.
    The Malaysian ringgit was another loser on the day,
declining a quarter percent while Taiwan's dollar also
dipped, breaking a key support at its 100-day simple moving
average (SMA).
    The Thai baht was down 0.3 percent, touching a
one-month low as caution set in ahead of the Bank of Thailand's
(BOT) monetary policy meeting.
    A Reuters poll showed 21 out of 22 analysts expected the
BOT's benchmark interest rate to remain unchanged, shrugging off
calls from the government and businesses for a cut to contain
the strength of the baht.
    The baht is the best performing Asian currency against the
dollar this year, with gains of more than 7 percent. 
        "We don't think a 25-basis point rate cut would do much
to spur economic activity, with interest rates already at such
low levels" said ANZ's Goh.
    "In addition, household debt levels are already quite high."
    Thailand's household debt-to-GDP ratio stood at about 80
percent, according to IMF data.
    India and Indonesia are the only two countries in Asia to
cut interest rates this year.
    The following table shows rates for Asian currencies against
the dollar at 0527 GMT.
   Change on the                                     
  day at   0527                              
  Currency           Latest bid    Previous  Pct Move
  Japan yen        112.37            112.22     -0.13
  Sing dlr         1.3569            1.3542     -0.20
  Taiwan dlr       30.248            30.216     -0.11
  Korean won       1139              1136.8     -0.23
  Baht             33.280             33.17     -0.33
  Peso             50.920            50.935     +0.03
  Rupiah           13388              13375     -0.10
  Rupee            65.54              65.45     -0.14
  Ringgit          4.220              4.205     -0.34
  Yuan             6.633             6.6400     +0.11
  Change so far                                      
 in 2017                                     
  Currency         Latest bid    End 2016    Pct Move
  Japan yen        112.37            117.07     +4.18
  Sing dlr         1.3569            1.4490     +6.79
  Taiwan dlr       30.248            32.279     +6.71
  Korean won       1139             1207.70     +5.99
  Baht             33.280             35.80     +7.57
  Peso             50.920             49.72     -2.36
  Rupiah           13388              13470     +0.61
  Rupee            65.535             67.92     +3.64
  Ringgit          4.220             4.4845     +6.28
  Yuan             6.633             6.9467     +4.74

 (Reporting by Patturaja Murugaboopathy Additional Reporting by
Gaurav Dogra in Bengaluru)
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