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EM ASIA FX-Asian currencies listless, brace for Fed meeting
September 19, 2017 / 4:55 AM / 3 months ago

EM ASIA FX-Asian currencies listless, brace for Fed meeting

 (Adds text, updates prices)
    By Anusha Ravindranath
    Sept 19 (Reuters) - Most emerging Asian currencies traded
narrowly on Tuesday as uncertainties surrounding the outcome of
a U.S. Federal Reserve meeting kept traders from making big
bets. 
    At a two-day meeting beginning later on Tuesday, the U.S.
central bank is expected to take another step toward policy
normalisation with plans to trim its massive portfolio. It is
seen holding interest rates steady after raising twice this
year.
    Investors are now prepping up for potentially more hawkish
statements from the Federal Reserve, after the Bank of England's
unexpected talk last week of a possible rate hike surprised
markets.
    "While the focus is on announcement of balance sheet
unwinding, we think the dots plot, Fed's projection on growth
and inflation and the tone of the press conference should not be
overlooked," said Christopher Wong, senior FX strategist for
Maybank.
    Wong said the Fed's tone might be somewhat neutral to mildly
hawkish, with the recent uptick in consumer prices offering some
relief for policymakers who believe that softness in inflation
was due to transitory factors.
    Commenting on the Fed's normalisation measures, he said 
Asian currencies could be less vulnerable today in an
environment supported by stronger global growth and a robust
trade recovery in Asia.  
    "This is an exercise that has never been done before and the
event that comes closest to this was when Fed first mentioned QE
tapering back in 2013, which saw yields and dollar surging while
Asia FX suffered," he added.
    But Wong said today's environment has empowered central
banks in Asia to shore up its defence by building up FX reserves
and offered relative flexibility on monetary policy bias
compared with 2013.
    The dollar hovered near an eight-week high against the yen
bolstered by U.S. Treasury yields which continued their sharp
rebound from 10-month lows.
    In Asia, the South Korean won lost ground amid
continuing tensions in the Korean peninsula.
    U.S. Defense Secretary Jim Mattis hinted on Monday about the
existence of military options on North Korea that might spare
Seoul from a brutal counterattack but declined to offer further
details. 
    The Chinese yuan weakened to its softest level in
more than two weeks after the central bank lowered its official
yuan midpoint to 6.5530 per dollar, the weakest since
Sept. 4.
    The yen was trading steady, unswayed by reports that
Japanese Prime Minister Shinzo Abe might call a snap election as
early as next month to take advantage of his improved approval
ratings and disarray in the main opposition party.
       
    HONG KONG DOLLAR 
    The Hong Kong dollar spot rate strengthened against
the greenback to 7.8025 by 0035 GMT, after the Hong Kong
Monetary Authority (HKMA) said it would sell an additional HK$40
billion of exchange fund bills to withdraw liquidity from the
system.
    This could be an attempt to slow the currency's pace of
depreciation as a similar issuance was conducted in mid-August
when it was trading towards a multi-year high of 7.8262, Maybank
said in a research note.
    The currency has weakened 0.6 percent against the U.S.
dollar this year, with analysts expecting it to remain weak,
primarily because of a widening interest rate differential as
the Federal Reserve progresses with rate rises.
    
The following table shows rates for Asian currencies against the
dollar at 0405 GMT.
CURRENCIES VS U.S. DOLLAR
  Change on the day at                           
        0405 GMT                            
  Currency                Latest  Previous    Pct
                             bid       day   Move
  Japan yen              111.510    111.56  +0.04
  Sing dlr               1.347      1.3476  +0.04
  Taiwan dlr             30.109     30.108  -0.00
  Korean won             1130.50    1126.6  -0.34
                         0                  
  Baht                   33.060      33.07  +0.03
  Peso                   51.050       51.1  +0.10
  Rupiah                 13260.0     13250  -0.08
                         00                 
  Rupee                  64.150      64.13  -0.03
  Ringgit                4.189       4.187  -0.05
  Yuan                   6.589      6.5761  -0.20
                                                 
  Change so far                                  
  Currency               Latest   End 2016    Pct
                         bid                 Move
  Japan yen              111.510    117.07  +4.99
  Sing dlr               1.347      1.4490  +7.56
  Taiwan dlr             30.109     32.279  +7.21
  Korean won             1130.50   1207.70  +6.83
                         0                  
  Baht                   33.060      35.80  +8.29
  Peso                   51.050      49.72  -2.61
  Rupiah                 13260.0     13470  +1.58
                         00                 
  Rupee                  64.150      67.92  +5.88
  Ringgit                4.189      4.4845  +7.05
  Yuan                   6.589      6.9467  +5.42
 


 (Reporting by Anusha Ravindranath in Bengaluru; Editing by
Jacqueline Wong)
  
 
 

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