February 1, 2018 / 6:49 AM / 10 months ago

EM ASIA FX-Asian currencies slip on Fed's inflation optimism; peso at 3-mth low

    * Asian currencies fall against dollar
    * Dollar steadies after more hawkish Fed
    * Philippine peso drops to weakest since Nov. 2

 (Adds text, updates prices)
    By Chris Thomas
    Feb 1 (Reuters) - Asian currencies slipped against the
dollar on Thursday, with the South Korean won leading the
retreat after the Federal Reserve took a confident stance on
inflation expectations in a boost to interest rate hawks.
    The dollar's receding yield advantage as other central banks
exited, or planned to exit, loose policies have kept its major
rivals and Asian currencies supported over recent weeks.
    Still, the Fed's optimism about the outlook for the economy
and inflation suggested room for a faster pace of interest rate
hikes this year, helping push the dollar up.
    "It's the rebound in the dollar which is driving the
weakness in Asian currencies today... and also partly due to
some profit taking or retracement after a recent strong run,"
said Khoon Goh, head of Asia research at ANZ Banking Group.
    The dollar index, which measures the greenback
against six rival currencies, took a breather from overnight
gains to trade marginally lower in afternoon Asian trade.
    Traders are now looking to looming U.S. data including
non-farm payrolls for further catalysts for the dollar. 
    Some analysts believe the recovery in the dollar could be
    "We think that dollar bears were scratched but not fractured
post-FOMC, and all eyes may remain trained on expected monetary
policy shifts from other major global central banks outside of
the Fed," Emmanuel Ng of OCBC Bank said a note. 
    "As such, expectations for the 'dollar smile' to kick in may
continue to disappoint for now."
    In Asia, the South Korean won weakened about 0.6
percent after data showed annual inflation in January was the 
slowest in almost 1-1/2 years, dropping further away from the
central bank's 2 percent target.
     Yet, South Korea's economy, which unexpectedly contracted
in the fourth quarter, received a boost with exports in January
up for the 15th straight month. 
    The Indian rupee traded nearly flat after falling
as much as 0.2 percent. 
    India's government began unveiling its 2018/19 federal
budget on Thursday, aiming for stronger economic growth to win
over voters ahead of a national election next year while trying
to maintain fiscal restraint.
    The Thai baht was largely steady after falling
slightly in morning trade. Thailand's central bank said it has
eased rules to allow more retail investors to directly invest in
overseas securities, a move that comes as it tries to slow a
strong baht.
     Goh, however, still sees upward pressure on the Thai owing
to the nation's large current account surplus.
    The Indonesian rupiah was slightly weaker, after data
showed annual inflation rate in January eased to its lowest
since December 2016.
    Malaysian markets were closed for a public holiday.
    The peso, which has underperformed the Asian
region so far this year partly on concerns over the Philippine's
current account deficit and capital outflows, fell 0.5 percent
to its weakest level in three months. 
    However, the Philippine central bank chief has dismissed
suggestions there could be a meltdown of the peso, saying the
currency was supported by healthy economic fundamentals.

    The central bank on Wednesday said annual inflation in
January may hit the upper end of the government's target range
of 2-4 percent for this year, boosted by higher prices of oil
and food.

 CURRENCIES VS U.S. DOLLAR                              
 Change on the day at 0535 GMT                          
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    109.280     109.17        -0.10
 Sing dlr                     1.312       1.3117        -0.02
 Taiwan dlr                   29.155      29.150        -0.02
 Korean won                   1072.200    1067.9        -0.40
 Baht                         31.340      31.31         -0.10
 Peso                         51.530      51.295        -0.46
 Rupiah                       13405.000   13387         -0.13
 Rupee                        63.590      63.58         -0.02
 Yuan                         6.292       6.2865        -0.09
 Change so far                                          
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    109.280     112.67        +3.10
 Sing dlr                     1.312       1.3373        +1.93
 Taiwan dlr                   29.155      29.848        +2.38
 Korean won                   1072.200    1070.50       -0.16
 Baht                         31.340      32.58         +3.96
 Peso                         51.530      49.93         -3.10
 Rupiah                       13405.000   13565         +1.19
 Rupee                        63.590      63.87         +0.44
 Yuan                         6.292       6.5069        +3.42
 (Reporting by Chris Thomas in Bengaluru; Editing by Shri
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