May 3, 2018 / 6:23 AM / a year ago

EM ASIA FX-Asian currencies mixed as dollar weakens after Fed holds rates

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    May 3 (Reuters) - Some Asian currencies edged higher on
Thursday as the dollar rally paused after the Federal Reserve
kept interest rates steady, prompting investors to book profits
on the greenback. 
    The dollar's index against a basket of six major
peers fell 0.03 percent to 92.487 after securing solid gains
over the past week.
    The Federal Reserve said inflation had "moved close" to its
target and that "on a 12-month basis was expected to run near
the Committee's symmetric 2 percent objective over the medium
    "We take this (the Fed's comments) to be an indication of
the Fed's willingness to tolerate an overshoot in inflation in
the coming months, hence 'further' gradual increases to the
federal fund rate is still warranted and there is no need to
rush the pace of rate hikes," MUFG bank said in a report.
    Chang Wei Liang, FX strategist at Mizuho Bank, said some
profit taking in the greenback strengthened Asian currencies on
the day, but cautioned that it could be a blip.
    "This could be just a minor adjustment ahead of another
rally in the dollar/Asia, assuming that wage inflation in the
U.S. continues to show signs of a pickup on Friday."
    Closely watched U.S. jobs data is due on Friday.        
    The Singapore dollar and the Thai baht led
regional currencies' gains against the dollar, rising 0.25
percent and 0.16 percent respectively.
    The Indian rupee and the South Korean won
 also edged up on the day.
    But Indonesia's rupiah fell to its lowest in more
than two years, hit by foreign selling in the local bond and
equity markets.
    Indonesian stock exchange and Ministry of Finance data
showed foreigners sold securities worth $684 million in equity
markets and $967 million in bonds in April.
    At the end of April the Indonesian central bank said it
would be prepared to raise the benchmark interest rate if the
rupiah's weakness threatened the bank's inflation target or
disrupted financial market stability. 
    Mizuho's Chang said he is confident that the rupiah can
remain stable this year. 
    "I think there is some degree of central bank resistance
towards further weakness in the rupiah," said Chang. 
    "We are not expecting too significant an increase in U.S.
Treasury yields going forward. That is likely to lessen
pressures on the rupiah."
    Meanwhile, China's yuan touched a three-month low
as the official midpoint setting was the softest since January. 
    "The USDCNY fixing was higher than expected, raising
speculation that China is using yuan as a tool for the trade
negotiations that would happen today," said a Maybank report.
    Talks between U.S. Treasury Secretary Steven Mnuchin and
Chinese Vice Premier Liu He, to try to stave off a trade war, 
are due later in the day.
    The following table shows rates for Asian currencies against
the dollar at 0545 GMT.

   Change as of  0545                           
  Currency               Latest  Previous    Pct
                            bid       day   Move
  Japan yen             109.580    109.83  +0.23
  Sing dlr              1.332      1.3362  +0.29
  Taiwan dlr            29.749     29.758  +0.03
  Korean won            1075.60    1076.1  +0.05
  Baht                  31.676      31.72  +0.14
  Peso                  51.940      51.86  -0.15
  Rupiah                13965.0     13940  -0.18
  Rupee                 66.605      66.66  +0.08
  Ringgit               3.937       3.933  -0.10
  Yuan                  6.364      6.3630  -0.02
  Change so far in                              
  Currency              Latest   End 2017    Pct
                        bid                 Move
  Japan yen             109.580    112.67  +2.82
  Sing dlr              1.332      1.3373  +0.38
  Taiwan dlr            29.749     29.848  +0.33
  Korean won            1075.60   1070.50  -0.47
  Baht                  31.676      32.58  +2.85
  Peso                  51.940      49.93  -3.87
  Rupiah                13965.0     13565  -2.86
  Rupee                 66.605      63.87  -4.11
  Ringgit               3.937      4.0440  +2.72
  Yuan                  6.364      6.5069  +2.25
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Additional
Reporting by Gaurav Dogra
Editing by Eric Meijer)
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