October 23, 2017 / 6:32 AM / in a year

EM ASIA FX-Largely lower as dollar surges on revival of tax reform plans

    By Hanna Paul
    Oct 23 (Reuters) - Most emerging Asian currencies started
the week on a bearish note as investors focused on the
greenback, hoisted up by the U.S. Senate's approval of a budget
blueprint that helped tax reforms gain momentum.
    U.S. President Donald Trump's plans of implementing a tax
reform took a step forward on Friday as a budget blueprint was
passed, giving Republicans a chance to overhaul the tax code
without Democratic support.
    Senate Republicans are under immense pressure to succeed
with tax reform after Trump's healthcare plans failed to gather
enough support.
    Christopher Wong, an FX strategist with Malayan Banking
Berhad, said that as Trump's promises for policy reforms
faltered, markets grew increasingly disappointed.
     "We saw the initial run-up in USD strength post-Trump
victory being more than reversed in the past 9 months," he said.
    Renewed expectations of progress in tax reform revived the
hope that increased healthcare and infrastructure spending could
also be inplemented, supporting growth and leading to higher
inflation, which would in turn spur tighter monetary policy,
Wong added.
    "Both these ... fiscal and monetary impulses could surprise
to the upside for the U.S. dollar," Wong said.
    The dollar index extended gains to rise up to 0.2
    The dollar also took support from the depreciating Japanese
yen, which was led lower by Japan's ruling party winning
a super majority in Sunday's election, boosting confidence that
Prime Minister Shinzo Abe's yen-weakening fiscal and monetary
expansion policies would continue.
    Among Asian currencies, the Singapore dollar nudged
lower ahead of key financial data due later in the day.
    Singapore's consumer price index is seen gaining at the same
pace as the previous month, according to analysts polled by
     The Philippine peso also followed the downward
trend, ahead of budget balance data due later in the day.
    The Chinese yuan edged lower as the People's Bank
of China lowered its official midpoint to its weakest since
October 10.
     Thailand's markets were closed for a public holiday.
   The Korean won started picking up by mid-session
and was the only Asia EM currency in positive territory. South
Korea's gross domestic product (GDP) data will be published on
    "For Korea's Q3 GDP, we see it edging up slightly to 2.9
percent, lifted by buoyant exports and machinery-related
investments on top of a gradual recovery in private
consumption," Mizuho Bank said in a note.
    South Korea's GDP growth almost halved in the second quarter
due to a drop in export volumes and a rapid fall in building
    The following table shows rates for Asian currencies against
the dollar at 0536 GMT.

  Change on the day at 0536 GMT                                 
  Currency                          Latest  Previous day     Pct
                                       bid                  Move
  Japan yen                      113.720           113.5   -0.19
  Sing dlr                       1.361            1.3607   -0.05
  Taiwan dlr                     30.268           30.241   -0.09
  Korean won                     1130.700           1131   +0.03
  Peso                           51.510            51.45   -0.12
  Rupiah                         13530.000         13517   -0.10
  Rupee                          65.030            65.04   +0.01
  Ringgit                        4.230             4.224   -0.14
  Yuan                           6.632            6.6195   -0.18
  Change so far in 2017                                         
  Currency                       Latest     End 2016         Pct
                                 bid                        Move
  Japan yen                      113.720          117.07   +2.95
  Sing dlr                       1.361            1.4490   +6.43
  Taiwan dlr                     30.268           32.279   +6.64
  Korean won                     1130.700        1207.70   +6.81
  Peso                           51.510            49.72   -3.48
  Rupiah                         13530.000         13470   -0.44
  Rupee                          65.030            67.92   +4.44
  Ringgit                        4.230            4.4845   +6.02
  Yuan                           6.632            6.9467   +4.75

 (Reporting by Hanna Paul; Editing by Eric Meijer)
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