February 28, 2020 / 7:16 AM / a month ago

EM ASIA FX-Indonesia's rupiah hammered by virus fears, set for worst week since 2013

    * Yuan set for first monthly loss in five
    * Ringgit poised for worst month since 2015

 (Adds text, updates prices)
    By Nikhil Nainan
    Feb 28 (Reuters) - Indonesia's rupiah fell sharply on
Friday, prompting the central bank to intervene in the spot
market as the currency was set for its worst week since 2013
amid the rapid spread of coronavirus epidemic outside China.
    Most other Asian currencies also weakened but clung to tight
ranges as mounting fears over the economic impact of the
outbreak raised bets of the U.S. Federal Reserve cutting
interest rates next month.
    A spike in new infections outside China has shattered hopes
that the economic fallout could be contained within a few
months.
    Indonesian markets have been hard hit this month as foreign
money exited, with Refinitiv data showing a little more than
$340 million in outflows of floating rate notes, greater than
those from the Philippines, Thailand or Vietnam, as of Thursday.
    On Friday, the rupiah slumped 1.2% to 14,200 per
dollar, shares fell more than 4%, and the yield on the
benchmark 10-year government bond rose to its
highest since mid-January.
    "The outlook for the U.S. dollar to Asia still depends on
how the Fed interprets the coronavirus, and whether it will take
pre-emptive action to arrest the current tightening of financial
conditions," said Wei-Liang Chang, a macro strategist at DBS
Bank.
    For the month, the currency lost 4.5%, its biggest since
2013 and the most among the nine currencies covered in this
report.
    Malaysia's rinngit shed 0.4% on Friday as investors
braced for a meeting of the country's nine monarchs, due later
in the day, to determine how the next government will be formed
after the shock resignation of Mahathir Mohamad as prime
minister.
    The currency has lost 3.2% so far in February, on course for
its worst month since 2015. 
    The Indian rupee weakened 0.5%, while the Singapore
dollar was down 0.2%.   
    The Singapore dollar had gained for three sessions prior to
Friday's weakness and it may eke out a small weekly gain after
five straight weeks of losses as some investors see safety in
the city-state's debt. 
    "We think SGSs (Singapore Government Securities) have scope
to outperform peers (other AAAs and USTs) over the medium term,"
DBS wrote in a note. 
    "Now Fed rate cut expectations have deepened... the dollar
may not be a one-way street," DBS' Chang said, pointing to the
Singapore dollar and the Chinese yuan stabilising.
    In China, the epicentre of the virus outbreak, the yuan
 has gained 0.2% for the week but was set to post its
first monthly decline in five.   
    Taiwan was closed for a public holiday.   
            
CURRENCIES VS U.S. DOLLAR AS AT 0550 GMT
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              108.850     109.58        +0.67
 Sing dlr               1.398       1.3950        -0.18
 Korean won             1215.600    1217.2        +0.13
 Baht                   31.670      31.64         -0.09
 Peso                   51.050      50.95         -0.20
 Rupiah                 14200.000   14030         -1.20
 Rupee                  71.945      71.61         -0.47
 Ringgit                4.224       4.208         -0.38
 Yuan                   7.008       7.0045        -0.06
                                                  
 Change so far in 2020                            
 Currency               Latest bid  End 2019      Pct Move
 Japan yen              108.850     108.61        -0.22
 Sing dlr               1.398       1.3444        -3.80
 Taiwan dlr             30.330      30.106        -0.74
 Korean won             1215.600    1156.40       -4.87
 Baht                   31.670      29.91         -5.56
 Peso                   51.050      50.65         -0.78
 Rupiah                 14200.000   13880         -2.25
 Rupee                  71.945      71.38         -0.79
 Ringgit                4.224       4.0890        -3.20
 Yuan                   7.008       6.9632        -0.64
 
 (Reporting by Nikhil Kurian Nainan, additional reporting by
Gaurav Dogra in Bengaluru)
  
 
 
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