June 19, 2018 / 6:13 AM / 10 months ago

EM ASIA FX-Asian currencies slip on trade war fears, investors run for cover

    * Taiwan dollar, Chinese yuan weaken most
    * Currencies drop broadly but yen, gold firm 
    * Thai, Philippine central bank rate decisions due on

 (Adds text, updates prices)
    By Aaron Saldanha
    June 19 (Reuters) - Emerging Asian currencies slipped
broadly on Tuesday as fears of fallout on the region from a
China-U.S. trade row sparked a flight to safe haven assets from
regional currencies.
    U.S. President Donald Trump on Monday threatened additional
tariffs on Chinese goods in an escalating tit-for-tat trade war
between the world's two biggest economies.
    Trump warned that Washington would impose a 10 percent
tariff on $200 billion of Chinese goods after Beijing's decision
to raise tariffs on $50 billion in U.S. goods, which was in
retaliation for U.S. tariffs announced on Friday.
    The Japanese yen, considered a safe haven currency in
times of market turmoil, climbed 0.7 percent against the dollar
to 109.795 yen, its strongest in a week.
    Gold also benefitted with spot prices rising 0.45
percent to $1,283.62 an ounce by 0336 GMT.
    Meanwhile, the dollar index, measuring it against a
basket of six major peers, wilted as much as 0.3 percent to
94.534 on Tuesday. 
    "Predictably, investors are running for cover under the
haven umbrellas as global equity indices are crumbling under the
weight of an escalating trade war," Stephen Innes, head of
trading APAC at Oanda, wrote in a note.
    China's yuan and the Taiwan dollar
weakened, trading for the first time this week. China and
Taiwan's markets were closed on Monday for a public holiday
while Indonesian financial markets remained shut on Tuesday.
    The yuan's 0.17 percent drop was surpassed by a 0.41 percent
slide in the Taiwan dollar, the region's worst performing
currency on Tuesday. The currency fell to its weakest since
mid-November in intraday trade.
    The South Korean won slipped 0.03 percent while
the Singapore dollar was 0.08 percent lower.
    Sino-U.S. trade tensions soured sentiment in India as well,
with the  rupee losing 0.16 percent.     
    The central banks of Thailand and the Philippines are
scheduled to hold meetings to decide monetary policy on
Wednesday. While the Thai benchmark rate is expected to be left
unchanged, a slim majority of economists believe the Philippine
central bank will raise interest rates for the second
consecutive meeting.
    Thailand's baht weakened again, following a drop of
more than 1 percent intra-day on Monday when a combination of
comments by the Thai finance minister and capital outflow
concerns weighed heavily on the currency.
    The minister said on Monday that a weaker baht would help
the country and that he saw no reason for Thailand to raise
interest rates.
    Thailand's 1-day repo rate has been maintained
at 1.5 percent for more than three years.
    Meanwhile, opinions on the Philippine central bank, Bangko
Sentral ng Pilipinas (BSP), potentially raising rates are
sharply divided, with the weak peso likely to be the factor that
will tilt the scale.
    "The negative feedback loop, where a continuously weak PHP
widens trade deficit which then further suppresses the currency,
could ultimately threaten the inflation target via higher import
prices," Zhu Huani, a market economist at Mizuho Bank, Ltd wrote
in a note.
    The Philippine peso held steady on Tuesday, but
remained not far from a 12-year low that it touched on Monday.  
    The following table shows rates for Asian currencies against
the dollar at 0457 GMT.   
 Change on day at 0457 GMT                                      
  Currency                    Latest bid  Previous day  Pct Move
  Japan yen                 109.750             110.54     +0.72
  Sing dlr                  1.352               1.3510     -0.08
  Taiwan dlr                30.126              30.002     -0.41
  Korean won                1105.100            1104.8     -0.03
  Baht                      32.700               32.67     -0.09
  Peso                      53.326              53.331     +0.01
  Rupee                     68.095               67.99     -0.16
  Ringgit                   3.996                3.996      0.00
  Yuan                      6.448               6.4370     -0.17
 * Indonesia closed for market holiday                          
  Change so far in 2018                                         
  Currency                  Latest bid    End 2017      Pct Move
  Japan yen                 109.750             112.67     +2.66
  Sing dlr                  1.352               1.3373     -1.09
  Taiwan dlr                30.126              29.848     -0.92
  Korean won                1105.100           1070.50     -3.13
  Baht                      32.700               32.58     -0.37
  Peso                      53.326               49.93     -6.37
  Rupiah                    13925.000            13565     -2.59
  Rupee                     68.095               63.87     -6.20
  Ringgit                   3.996               4.0440     +1.20
  Yuan                      6.448               6.5069     +0.92
 (Reporting by Aaron Saldanha in Bengaluru
Editing by Jacqueline Wong)
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