March 9, 2020 / 6:23 AM / a month ago

EM ASIA FX-Currencies weaken as oil price crash dampens risk sentiment

    * Oil prices plunge about 30%
    * Malaysian ringgit drops to mark worst day in two-weeks
    * Yuan expected to outperform the basket in 2020 - HSBC
analyst

 (Adds text, updates prices)
    By Anushka Trivedi
    March 9 (Reuters) - Asian currencies weakened on Monday as
investors sold off risky assets after a plunge in oil prices
exacerbated concerns over economic fallout stemming from the
coronavirus epidemic.
    Saudi Arabia's decision to slash average selling prices and
ramp up crude production after Russia backed away from making
output cuts sent shockwaves through the markets and is likely to
weigh on regional currencies, since the majority of them are net
oil importers.
    Meanwhile, the number of coronavirus cases globally surged
past 107,000 as the outbreak spread to more countries. Italy
took drastic measures and sealed off large parts of the
prosperous north of the country, including financial capital
Milan.
    Panicked investors sought safer bets and pushed the Japanese
yen up 3% against the dollar to a three-year high and the
euro to a two-year peak.
    U.S. 30-year treasury yields sank below 1% and
10-year yields under 0.5%, eroding the dollar's
chief attraction as the markets upped their bets for further
rate cuts by the Federal Reserve to mitigate the economic
damage.         
    The Fed's move is expected to spill over to Asia, with
Morgan Stanley analysts expecting that "the majority of emerging
market central banks will also cut rates further, taking global
monetary policy rates to a new all-time low."
    Malaysia, and oil importing nation Indonesia, saw their
currencies lose nearly 1% against the dollar, while their
respective stock markets also hit multi-year lows.
    The rupiah was on track to slide for a third straight
session and Indonesia's 10-year government bond yield
 rose slightly.
    The Malaysian ringgit dropped 0.9% and was on its way
to mark a worst session in two-weeks. The country's new prime
minister is due to announce his new cabinet later on Monday, a
week after he was appointed amid a political tussle.

    The South Korean won weakened as much as 1.3% to
1,207.20 against the dollar, prompting its finance ministry to
issue a verbal warning against disorderly currency market
movement.
    India, the world's third-biggest oil importer, saw its
currency decline 0.3%, while the Singapore dollar
 gave up about 0.5%.        
    The Chinese yuan pared early gains to trade 0.1%
lower after reporting a larger than expected plunge in exports
over the weekend.
    However, analysts at HSBC see the yuan benefiting from a dip
in oil prices as nearly a quarter of its imports are
commodity-related.
    China's monetary policy will be closely watched, which has
so far lagged the Fed's, and resulted in a record yield
differential that is likely to support foreign inflows to its
bond market, HSBC added.
    "We believe the yuan will outperform the basket this year."
      
  CURRENCIES VS U.S. DOLLAR AS AT 0518 GMT 
 Currency                     Latest bid  Previous day  Pct
                                                        Move
 Japan yen                    102.560     105.3         +2.67
 Sing dlr                     1.385       1.3781        -0.46
 Taiwan dlr                   30.077      30.040        -0.12
 Korean won                   1205.300    1192.3        -1.08
 Baht                         31.530      31.41         -0.38
 Peso                         50.625      50.54         -0.17
 Rupiah                       14350.000   14220         -0.91
 Rupee                        73.975      73.73         -0.34
 Ringgit                      4.208       4.17          -0.90
 Yuan                         6.943       6.9342        -0.12
                                                        
 Change so far in 2020                                  
 Currency                     Latest bid  End 2019      Pct
                                                        Move
 Japan yen                    102.560     108.61        +5.90
 Sing dlr                     1.385       1.3444        -2.90
 Taiwan dlr                   30.077      30.106        +0.10
 Korean won                   1205.300    1156.40       -4.06
 Baht                         31.530      29.91         -5.14
 Peso                         50.625      50.65         +0.05
 Rupiah                       14350.000   13880         -3.28
 Rupee                        73.975      71.38         -3.51
 Ringgit                      4.208       4.0890        -2.83
 Yuan                         6.943       6.9632        +0.29
 
 (Reporting by Anushka Trivedi in Bengaluru; Editing by Shailesh
Kuber)
  
 
 
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