October 30, 2018 / 6:12 AM / 9 months ago

EM ASIA FX-Fears of fresh U.S. tariffs on China weigh on Asian currencies

    * Thai baht hits weakest level since mid-August
    * Chinese yuan at over a decade low

 (Adds text, updates prices)
    By Ambar Warrick
    Oct 30 (Reuters) - Most Asian currencies weakened on Tuesday
as fears of an escalation in the U.S.-China trade war drove
investors out of riskier, emerging market assets.
    The U.S. dollar rose on safe-haven buying after
Bloomberg reported that the U.S. was preparing to announce
tariffs on all remaining Chinese imports by early December if
talks next month between presidents Donald Trump and Xi Jinping
failed to ease the trade war.
    Global equities fell after the report, though most Asian
stock markets clawed back early losses in choppy trade on
Tuesday.
    "The willingness on (the) U.S. front to escalate trade
tensions instead of adopting a conciliatory tone to de-escalate
tensions was interpreted as a dampener on risk sentiment,"
Maybank said in a note.
    In Asia, the Chinese yuan fell about 0.09 percent
to 6.969 against the dollar, its weakest level in more than a
decade. Markets are closely watching to see if the central bank
firmly defends the key 7 level or tolerates a gradual decline
through that mark as the trade outlook worsens.
    The Thai baht fell as much as 0.47 percent to
33.325 per dollar, its weakest level in more than two months. It
was on track for its third straight session of declines.
    The Indian rupee fell about 0.18 percent to the
dollar. The currency is the biggest yearly decliner among its
Asian peers.
    Bucking the trend, the South Korean won edged up,
in tandem with local equities.
    
    THAI BAHT HIT BY MANUFACTURING SLOWDOWN
    Thailand's factory output in September fell for the first
time in 17 months. Factory output in the country serves as a
precursor for the volume of its future exports, which include
automobile parts and electronic goods.
    Thailand's finance ministry said it expects exports in 2018
to rise less than initially expected. However, it maintained its
economic growth target, and reiterated that its key interest
rate would be steady at 1.5 percent by the end of the year.

    Among its Asian peers, the baht has lost the least to the
dollar in the year so far.

    CHINESE YUAN NEARS UNLUCKY 7
    The People's Bank of China (PBOC) set its official midpoint
at the lowest level in more than a decade on Tuesday. The
currency had concluded trade at a more than 10-year low on
Monday.
    The yuan's decline has fuelled speculation over whether it
will be allowed to test or breach the psychologically important
level of 7 to the dollar, which could trigger a spike in capital
outflows from the cooling economy.
    Major state-owned Chinese banks were seen swapping yuan for
dollars in forwards on Tuesday, but there was no
immediate evidence of dollar selling in the spot market, three
traders said.
    The following table shows rates for Asian currencies against
the dollar at 0535 GMT.
    
 CURRENCIES VS U.S. DOLLAR                              
                                                        
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    112.660     112.36        -0.27
 Sing dlr                     1.383       1.3835        +0.04
 Taiwan dlr                   30.984      30.996        +0.04
 Korean won                   1139.300    1141.4        +0.18
 Baht                         33.240      33.17         -0.21
 Peso                         53.600      53.56         -0.07
 Rupiah                       15230.000   15215         -0.10
 Rupee                        73.570      73.44         -0.18
 Ringgit                      4.178       4.178          0.00
 Yuan                         6.969       6.9620        -0.09
                                                        
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    112.660     112.67        +0.01
 Sing dlr                     1.383       1.3373        -3.30
 Taiwan dlr                   30.984      29.848        -3.67
 Korean won                   1139.300    1070.50       -6.04
 Baht                         33.240      32.58         -1.99
 Peso                         53.600      49.93         -6.85
 Rupiah                       15230.000   13565         -10.93
 Rupee                        73.570      63.87         -13.18
 Ringgit                      4.178       4.0440        -3.21
 Yuan                         6.969       6.5069        -6.63
 

 (Reporting by Ambar Warrick in Bengaluru; Editing by Kim
Coghill)
  
 
 
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