May 23, 2019 / 6:20 AM / 3 months ago

EM ASIA FX-Indian rupee rallies as PM Modi set for second term

    * Early counting trends suggest massive mandate for ruling
    * South Korean won scales one-week high
    * Indonesian rupiah recovers from previous session's losses

 (Adds text, updates prices)
    By Aby Jose Koilparambil
    May 23 (Reuters) - The Indian rupee gained as much as 0.4%
on Thursday after early counting trends suggested a comfortable
victory for Prime Minister Narendra Modi's Bharatiya Janata
Party-led coalition, setting the stage for his second term with
a stronger mandate.
    Exit polls had predicted a clear win for Modi in the
election held over April and May, and the initial counting leads
came in line with those predictions.
    The rupee has risen in all four sessions since the
exit poll results were released on Sunday.
    "The initial leads are suggesting that the BJP is going to
get a majority of its own and that is very positive for all
asset classes because such a mandate brings political stability.
There will be extensive capital inflows to India," said Anindya
Banerjee, analyst at Kotak Securities.
    Banerjee added that the extent of appreciation in the rupee
might be limited now but it stood to outperform its emerging
market peers in the near term.
    Most other Asian currencies drifted lower but fared better
than regional equities markets as stability in the Chinese yuan
helped stave off pressure from U.S.-China trade tensions.
    The yuan, the Singapore dollar, the Thai
baht, the Philippine peso and the Malaysian
ringgit weakened, but traded in narrow ranges. 
    "One key reason for wider Asian currency stability is the
yuan staying below the 7.00 mark against the dollar. That is
helping to curb the sentiment in the wider Asian currency space
given that the yuan is such a big driver in the region," said
Chang Wei Liang, forex strategist at Mizuho Bank.
    The South Korean won firmed as much as 0.4% to a
one-week peak and is set for a fourth straight session of gains.
 After three consecutive months of losses and being down about
2% so far in May, the won's fortunes turned around this week.
    South Korean finance ministry and central bank officials on
Wednesday issued verbal warnings against disorderly currency
market movements, saying the exchange rate appeared to have been
"overshooting" as the won was weakening "relatively fast".

    The Indonesian rupiah bounced back from the
previous session's losses as calm returned to the streets of
Jakarta after clashes between security forces and protesters
angry over Indonesian President Joko Widodo winning a second
    The rupiah put on as much as 0.3% to 14,480 against the
dollar, its best intraday percentage gain in three weeks.
    Commenting on the rupiah's recovery, analysts at Oanda said
in a note that the political worries caused by overblown
coverage of the riots would probably fade quickly.
    The following table shows rates for Asian currencies against
the dollar at 0551 GMT.
 Japan yen              110.280     110.34    +0.05
 Sing dlr               1.380       1.3790    -0.09
 Taiwan dlr             31.520      31.530    +0.03
 Korean won             1189.200    1192.8    +0.30
 Baht                   31.970      31.94     -0.09
 Peso                   52.470      52.39     -0.15
 Rupiah                 14485.000   14520     +0.24
 Rupee                  69.535      69.66     +0.18
 Ringgit                4.192       4.1845    -0.18
 Yuan                   6.914       6.9068    -0.10
 Change so far in 2019                        
 Currency               Latest bid  End 2018  Pct Move
 Japan yen              110.280     109.56    -0.65
 Sing dlr               1.380       1.3627    -1.27
 Taiwan dlr             31.520      30.733    -2.50
 Korean won             1189.200    1115.70   -6.18
 Baht                   31.970      32.55     +1.81
 Peso                   52.470      52.47     +0.00
 Rupiah                 14485.000   14375     -0.76
 Rupee                  69.535      69.77     +0.34
 Ringgit                4.192       4.1300    -1.48
 Yuan                   6.914       6.8730    -0.59

 (Reporting by Aby Jose Koilparambil in Bengaluru
Editing by Jacqueline Wong)
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