October 27, 2017 / 6:34 AM / a year ago

EM ASIA FX-Asian currencies languish; rupiah slips to over 16-month low

 (Adds text, updates prices)
    By Sandhya Sampath
    Oct 27 (Reuters) - Asian currencies came under pressure on
Friday as the dollar strengthened against the euro after the
European Central Bank extended its bond purchases into 2018,
diminishing near-term chances of a rate hike in the euro zone.
    The ECB prolonged its bond purchases by nine months to
September 2018 on Thursday, but promised years of stimulus and
even left the door open to backtracking.
    ECB chief Mario Draghi made stark contrasting comments from
that of the U.S. Federal Reserve, which is poised to raise rates
in December as it continues to normalise monetary policy, giving
the greenback a boost.
    The forward guidance that interest rates would remain
unchanged until "well past" the end of the asset purchases kept
ECB in the camp of a "dovish taper" and contributed to a classic
case of buy the rumour and sell the fact for the euro, OCBC Bank
said in a research note.
    The euro touched $1.1624, its lowest since July 26,
while the dollar index, which tracks the greenback against a
basket of six major rivals, added 0.2 percent to 94.800,
trading at three-month highs.
    The dollar also got a boost as the U.S. House of
Representatives voted on Thursday to clear a procedural path for
a Republican tax bill.
    Among Asian currencies, the South Korean won
weakened the most, while the Taiwan dollar, Malaysian
ringgit, Singapore dollar, Chinese yuan
and Japanese yen were on track for their second week of
    The Indonesian rupiah weakened as much as 0.4 percent
against the dollar, to its lowest in more than 16 months,
weighed down by rally in the dollar.   
    The rupiah was also on track for a second week of losses,
losing about 0.8 percent for the week. 
    The Philippine peso edged slightly weaker,
although hitting a fresh 11-year low, and was set for a fifth
week of losses, while the Thai baht eased 0.3 percent
against the dollar.
    The Singapore dollar weakened for a second consecutive
session, down 0.2 percent to a three-month low, and was on track
to end the week about 0.5 percent lower.
    The central bank said the city-state's labour demand is
expected to improve in the near term but accumulated slack in
the market will take time to be absorbed.
    The Malaysian ringgit edged 0.2 percent lower to its weakest
in more than three weeks ahead of the country's 2018 budget
later on Friday.
    China's yuan tracked the regional sell-off
against the dollar, weakening 0.3 percent after the central bank
lowered its official midpoint by the most in five weeks.
    The Chinese currency was on track to end the week 0.5 lower.
    The South Korean won was marginally up for the
week, although weakening as much as 0.7 percent on Friday.
    The won has been performing very well in the region so far,
but the significant dollar streak affected the won eventually,
said Irene Cheung, Senior strategist for Asia at ANZ said.
    The won has appreciated just over 6 percent against the
dollar this year, as of Thursday's close.
    The following table shows rates for Asian currencies against
the dollar at 0542 GMT.
   Change on the day at                                        
          0542 GMT                                     
  Currency                   Latest bid  Previous day  Pct Move
  Japan yen                  114.17            113.97     -0.18
  Sing dlr                   1.3687            1.3668     -0.14
  Taiwan dlr                 30.272            30.229     -0.14
  Korean won                 1131              1124.6     -0.52
  Baht                       33.280             33.21     -0.21
  Peso                       51.810             51.75     -0.12
  Rupiah                     13620              13580     -0.29
  Rupee                      65.01              64.82     -0.30
  Ringgit                    4.241             4.2325     -0.20
  Yuan                       6.653             6.6435     -0.14
  Change so far in 2017                                        
  Currency                   Latest bid  End 2016      Pct Move
  Japan yen                  114.17            117.07     +2.54
  Sing dlr                   1.3687            1.4490     +5.87
  Taiwan dlr                 30.272            32.279     +6.63
  Korean won                 1131             1207.70     +6.83
  Baht                       33.280             35.80     +7.57
  Peso                       51.810             49.72     -4.03
  Rupiah                     13620              13470     -1.10
  Rupee                      65.013             67.92     +4.47
  Ringgit                    4.241             4.4845     +5.74
  Yuan                       6.653             6.9467     +4.42

 (Reporting by Sandhya Sampath in Bengaluru; Editing by
Jacqueline Wong)
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