May 10, 2018 / 6:21 AM / 6 months ago

EM ASIA FX-Malaysian ringgit dips in offshore trade on shock election result

    * Financial markets in Malaysia on holiday after Mahathir
Mohamad's win  
    * Indonesian rupiah climbs in offshore trading after BI
lends
support

 (Adds text, updates prices)
    By Susan Mathew
    May 10 (Reuters) - The Malaysian ringgit fell in
offshore trading on Thursday on news of a shock election victory
for opposition party leader Mahathir Mohamad.  
   Mahathir's Pakatan Harapan Alliance scored a wholly
unexpected win over Prime Minister Najib Razak's Barisan
Nasional, marking the first time a party other than the Barisan
Nasional will rule since Malaysia gained independence from
Britain in 1957.
    The ringgit one-month and three-month non-deliverable
forwards (NDF) weakened from Wednesday's close.

    Bursa Malaysia, the national stock exchange, said trade
would be suspended on Thursday and Friday in line with public
holidays declared by the government.
    Mizuho Bank said the holidays and suspension of trade was
"buying time for Pakatan Harapan lawmakers to reassure investors
that any change would be gradual and carefully managed". 
     A Bank Negara Malaysia spokesman said it would hold its
policy meeting as scheduled later in the day. 
    "Malaysia is in unchartered territory as it has never had
change of federal government before. The market had factored in
a win for the ruling coalition so there will be some outflows on
expectations of policy changes," said Jalil Rasheed, investment
director at Invesco. 
    
    RUPIAH 
    Indonesia's rupiah took the opposite tack in offshore
trading on Thursday, with the three-month NDF strengthening to
14,385 from Wednesday's 14,411, after the central bank said it
would intervene to support the currency.
    Indonesia's financial markets were closed for a local
holiday. The spot rupiah ended at 14,075 against the dollar on
Wednesday, its third session of falls and hitting its lowest
since Dec 2015.
    Bank Indonesia (BI) had suggested it may raise interest
rates as it said it was preparing to take monetary steps
including adjusting the 7-day reverse repo rate - its key rate. 
    The central bank said it would assess the level of inflation
and the trade balance, as well as global capital flows and U.S.
interest rates, before deciding whether to hike. 
    BI is to hold its monthly policy meeting next week. It has
kept the interest rate constant since cutting it by
25 basis points in September last year. 
    
    PHILIPPINE PESO, CHINESE YUAN
    The peso rose 0.3 percent after news its economy
grew 6.8 percent in the first quarter from a year earlier,
matching expectations, driven by industry and services.
    The data comes before the central bank's monthly policy
meeting later in the day when it is expected to hike the key
interest rate as inflation picks up.

    The Chinese yuan edged higher. China's producer
inflation picked up for the first time in seven months in April,
bolstered by surging commodity prices and suggesting its
industrial demand remains resilient in the face of trade
tensions with the United States.
    Inflation in China is watched closely by analysts and
investors for signs of a long-expected economic slowdown that
would possibly tip a shift in central bank policy.
    
    CURRENCIES VS U.S. DOLLAR
 
 Change on the day at 0440 GMT                     
 Currency                Latest bid  Previous day  Pct Move
 Japan yen               109.700     109.74        +0.04
 Sing dlr                1.343       1.3459        +0.19
 Taiwan dlr              29.919      29.928        +0.03
 Korean won              1075.100    1080.9        +0.54
 Baht                    32.120      32.08         -0.12
 Peso                    51.813      51.991        +0.34
 Rupee                   67.390      67.26         -0.19
 Yuan                    6.365       6.3688        +0.05
                                                   
 Change so far in 2018                             
 Currency                Latest bid  End 2017      Pct Move
 Japan yen               109.700     112.67        +2.71
 Sing dlr                1.343       1.3373        -0.45
 Taiwan dlr              29.919      29.848        -0.24
 Korean won              1075.100    1070.50       -0.43
 Baht                    32.120      32.58         +1.43
 Peso                    51.813      49.977        -3.54
 Rupiah*                 14075.000   13565         -3.62
 Rupee                   67.390      63.87         -5.22
 Ringgit**               3.948       4.0440        +2.43
 Yuan                    6.365       6.5069        +2.22
    *Markets closed on Thursday. Values as of last close on
Wednesday, **Tuesday

 (Reporting by Susan Mathew in Bengaluru;
Editing by Eric Meijer)
  
 
 
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