July 31, 2019 / 5:24 AM / 4 months ago

EM ASIA FX-Caution the buzzword ahead of Fed decision

    * Most currencies trade in narrow range
    * Thai baht to post its first monthly drop in three
    * Won slips over 2% in July

 (Adds text, updates prices)
    By Aby Jose Koilparambil
    July 31 (Reuters) - Most Asian currencies were subdued on
Wednesday as investors remained cautious ahead of a U.S. Federal
Reserve rate decision later in the day, with markets already
pricing in a 25-basis- point cut and awaiting clues on whether
there will be more.
    Unlike Asian shares, regional currencies did not weaken
significantly on fresh trade war concerns following threats from
U.S. President Donald Trump to Beijing.
    The Fed decision has been the dominant theme for Asian
currencies for weeks. A prospective first rate cut in more than
a decade notwithstanding, markets will be all ears to the U.S.
central bank's views on global economic health.
    OCBC Bank analysts said in a note that market participants
would watch for any Fed rhetoric that could shed light on
whether the expected rate cut is seen as a one-off "insurance"
move or the start of an easing cycle.
    The Thai baht, the Korean won and the
Indonesian rupiah all edged up around 0.1%.
    The baht, the best regional performer so far this year with
about a 6% gain, is however set to post its first monthly drop
in three - a fall of about 0.3% in July.
    Thai trade data for June is scheduled to be released later
in the day, and with the custom cleared exports posting a
lower-than-expected drop and imports declining by a whopping
9.4% margin, the country’s current account balance is slated to
    The won, which has slipped the most among the regional peers
this year with more than a 5% drop, is en route to post about a
2.3% decline in July.
    Data released earlier in the day showed South Korea's June
industrial output fell 2.9% month-on-month, while retail sales
slid 1.6% during the same period.
    China's yuan gained about 1% despite weak factory
activity data. An official manufacturing gauge shrank for the
third straight month in July, underlining the need for more
stimulus to support an economy hit hard by the bruising trade
war with the United States.
    The Indian rupee, the Malaysian ringgit,
the Philippine peso and the Taiwan dollar were
little changed.
 Change on the day at   0508 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              108.540     108.59        +0.05
 Sing dlr               1.369       1.3700        +0.07
 Taiwan dlr             31.080      31.075        -0.02
 Korean won             1180.700    1181.6        +0.08
 Baht                   30.770      30.81         +0.13
 Peso                   50.800      50.8          +0.00
 Rupiah                 14005.000   14015         +0.07
 Rupee                  68.870      68.86         -0.01
 Ringgit                4.125       4.123         -0.05
 Yuan                   6.881       6.8845        +0.05
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              108.540     109.56        +0.94
 Sing dlr               1.369       1.3627        -0.47
 Taiwan dlr             31.080      30.733        -1.12
 Korean won             1180.700    1115.70       -5.51
 Baht                   30.770      32.55         +5.78
 Peso                   50.800      52.47         +3.29
 Rupiah                 14005.000   14375         +2.64
 Rupee                  68.870      69.77         +1.31
 Ringgit                4.125       4.1300        +0.12
 Yuan                   6.881       6.8730        -0.11

 (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by
Kim Coghill)
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