September 19, 2019 / 6:23 AM / 25 days ago

EM ASIA FX-Asian currencies weaken as Fed dampens rate-cut view

    * Stronger dollar pressures Asian currencies
    * Indonesia, Taiwan rate decisions awaited
    * South Korean won declines most 

 (Adds text, updates prices)
    By Shreya Mariam Job
    Sept 19 (Reuters) - Most Asian currencies slipped on
Thursday after the U.S. Federal Reserve reined in market
expectations of further interest rate cuts and as investors
awaited regional central bank policy decisions. 
    The Fed cut interest rates on Wednesday, as expected, to
help sustain a record-long economic expansion, but signalled it
would set a higher bar for further reductions. 
    The Fed's cautious outlook drove the greenback higher
against major currencies, with the exception of the Japanese yen
. 
    "In the wake of the FOMC (Federal Open Market Committee),
Asian currencies not only have to contend with a firmer USD
complex, but also the potential vulnerability to another bout of
risk aversion," a note from OCBC said.     
    The yuan slipped 0.2%, with market focus now on
China's new lending reference rate decision on Friday, following
the Fed's rate cut, to see if there will be further easing and
if so, to what extent. 
    Investors also pulled back from riskier assets, with the
Korean won declining the most in the region, while
the Malaysian ringgit weakened 0.3%. 
    Meanwhile, the Indonesian rupiah weakened 0.2%
ahead of Bank Indonesia's rate decision later in the day, with a
small majority of economists predicting a rate cut according to
a Reuters poll.
    The Taiwan dollar on the other hand was little
changed, with the market expecting the island's central bank to
keep rates on hold for the 13th consecutive session later on
Thursday.    

    KOREAN WON
    The South Korean won shed 0.4% against a firmer dollar after
a Bank of Korea board member signalled the possibility of
further rate cuts despite interest rates approaching record
lows. 
    Board member Shin In-seok said interest rates should be cut
further to deal with weak inflation and also dismissed concerns
that rates going below the historic low could spark capital
flight.
    The central bank chief also said that heightened external
uncertainties are still a top factor in considering rate policy.
 The central bank is widely expected to cut its
policy rate by a quarter-point at its next review on Oct. 16. 
    The market, however, remained wary considering the won is
already by far the worst performing currency in the region this
year, having lost 6.8% to the U.S. dollar.

    The following table shows rates for Asian currencies against
the dollar at 0541 GMT.
    CURRENCIES VS U.S. DOLLAR
 Change on the day at   0541 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              107.870     108.44        +0.53
 Sing dlr               1.378       1.3760        -0.15
 Taiwan dlr             31.004      31.000        -0.01
 Korean won             1195.800    1191.3        -0.38
 Baht                   30.550      30.53         -0.07
 Peso                   52.220      52.15         -0.13
 Rupiah                 14085.000   14055         -0.21
 Rupee                  71.250      71.23         -0.03
 Ringgit                4.195       4.182         -0.31
 Yuan                   7.102       7.0870        -0.21
                                                  
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              107.870     109.56        +1.57
 Sing dlr               1.378       1.3627        -1.12
 Taiwan dlr             31.004      30.733        -0.87
 Korean won             1195.800    1115.70       -6.70
 Baht                   30.550      32.55         +6.55
 Peso                   52.220      52.47         +0.48
 Rupiah                 14085.000   14375         +2.06
 Rupee                  71.250      69.77         -2.08
 Ringgit                4.195       4.1300        -1.55
 Yuan                   7.102       6.8730        -3.22
 
 (Reporting by Shreya Mariam Job in Bengaluru
Editing by Jacqueline Wong)
  
 
 
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