August 8, 2019 / 6:17 AM / 10 days ago

EM ASIA FX-China's yuan fix, exports data boost Asia FX as recession worries linger

    * PBOC sets firmer fixing than expected, but weakest since
    * China export data shows signs of resistance to U.S. trade
    * Indian rupee, baht gain after rate cuts; c.banks raise
for future
    * Philippine central bank expected to cut rates later on

 (Adds text, updates prices)
    By Nikhil Nainan
    Aug 8 (Reuters) - China's yuan gained on Thursday after more
signs Beijing was slowing its fall, while currencies across Asia
were also lifted by better export data from China a day after
surprise rate cuts by central banks raised the spectre of a
global recession.
    The People's Bank of China (PBOC) set the midpoint rate
 at a firmer level than most had predicted, allaying
some investor nerves after the yuan crossed the key 7
per dollar level on Monday. However, the fixing was still the
weakest in more than a decade.
    "This suggests that PBoC still desires stability over
volatility," Maybank said in a note, referring to Thursday's
    The yuan strengthened 0.2% against the dollar to 7.044.  
    Further helping sentiment, data earlier in the day showed
China's exports unexpectedly returned to growth in July despite
escalating U.S. trade pressure, rising 3.3% from a year earlier,
when analysts had looked for a fall of 2%.
    Concerns still remain about whether the world's second
largest economy can withstand even more pressure from Washington
after U.S. President Donald Trump said his country would levy
additional tariffs on Chinese goods from Sept. 1. 
    Market participants were taken back on Wednesday when Asian 
central banks raised concerns about global growth with New
Zealand and India delivering bigger-than-expected rate cuts
while Thailand eased policy unexpectedly. That set the stage for
the Philippine central bank's meeting later in the day, with
some even predicting it might cut by a steep 50 basis points,
similar to the shock move by New Zealand.
    The Southeast Asian country earlier in the day released data
showing below-forecast gross domestic product growth of 5.5% in
the second quarter, the weakest in almost two years. The peso
 was marginally stronger against the dollar. 
    The Reserve Bank of India (RBI), which cut rates by an
unconventional 35 basis points for its fourth straight easing on
Wednesday, also highlighted its worries about domestic growth.

    The rupee was little changed at 70.840 a dollar, as
oil prices jumped on expectations of more production cuts.
    HSBC expects two more 25 basis-point rate cuts by the RBI
over the fourth quarter of this year and the first quarter of
the next, "making this a 160bp rate-cutting cycle."
    The baht, Asia's best performer this year, gained 0.2% to
30.74, a day after the Thai central bank surprised markets with
its own 25 basis points rate cut to 1.5%, a quarter-point above
the record low.
    "A rate cut might lower the baht's yield appeal, but it will
be no panacea," DBS wrote in a note. 
    South Korea's won KRW-KFTC and Taiwan's dollar,
both of which are highly susceptible to trade-related news,
gained 0.4% each. 
    In a further easing of market fears in South Korea, two
officials at its trade ministry said the country held off plans
to drop Japan from the so-called "white list" of countries with
fast-track export status, amid the broader trade dispute between
the two countries.
 Change on the day at   0505 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              106.130     106.26        +0.12
 Sing dlr               1.382       1.3823        +0.05
 Taiwan dlr             31.349      31.487        +0.44
 Korean won             1210.400    1214.9        +0.37
 Baht                   30.740      30.8          +0.20
 Peso                   52.180      52.24         +0.11
 Rupiah                 14210.000   14215         +0.04
 Rupee                  70.840      70.89         +0.06
 Ringgit                4.182       4.186         +0.10
 Yuan                   7.044       7.0596        +0.22
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              106.130     109.56        +3.23
 Sing dlr               1.382       1.3627        -1.37
 Taiwan dlr             31.349      30.733        -1.96
 Korean won             1210.400    1115.70       -7.82
 Baht                   30.740      32.55         +5.89
 Peso                   52.180      52.47         +0.56
 Rupiah                 14210.000   14375         +1.16
 Rupee                  70.840      69.77         -1.51
 Ringgit                4.182       4.1300        -1.24
 Yuan                   7.044       6.8730        -2.43

 (Reporting by Nikhil Kurian Nainan in Bengaluru
Editing by Shri Navaratnam)
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