May 14, 2018 / 5:50 AM / in 10 days

EM ASIA FX-Malaysian ringgit reverses losses, Indonesia's rupiah slips

    * Ringgit pares losses after sharp fall
    * Rupee inches up ahead of inflation data
    * Rupiah slips, eyes on central bank meet later in week

 (Adds text, updates prices)
    By Nikhil Nainan
    May 14 (Reuters) - The Malaysian ringgit pared losses after
falling to its lowest in over a year on Monday following last
week's shock election upset, while most other Asian currencies
gained on the dollar. 
    The ringgit fell as much as 0.9 percent as Malaysian
markets reopened for the first time since Wednesday's general
election, but clawed its way back and was up marginally at 3.946
per dollar by midday.
    Veteran politician Mahathir Mohamad came out of retirement
to lead the opposition to victory over a ruling party he had
once led, defeating prime minister Najib Razak Najib.
    On Saturday, Mahathir appointed Lim Guan Eng as finance
minister, best known as the chief minister of Penang, the second
richest state in the country, a move seen by many as investor
friendly.
    Mizuho Bank, in a note, said the appointment is expected to
"underscore market confidence", alluding to his achievements in
Penang.
    Some investors were concerned over the populist economic
policies of the new government, including plans to remove a
goods and service tax. But some analysts thought the moves could
boost domestic demand.
    The dollar index against a basket of six major currencies
 edged lower at 92.537 0530 GMT.
    South Korea's won gained 0.2 percent, as
sustained progress with North Korea soothed markets.
    Over the weekend, North Korea said it would dismantle its
nuclear bomb test site, a move that prompted the U.S. to propose
lifting sanctions on the reclusive state. 
    North Korea's overtures come ahead of Kim Jong Un's meeting
with U.S. President Donald Trump in Singapore on June 12.

    The Thai baht strengthened to 31.83 against the
dollar, ahead of the country's central bank meet to decide the
1-day repo rate on Wednesday.
    "We see no change for the upcoming policy meeting, given
that Thailand's underlying inflation has been undershooting
target," Mizuho Bank said. 
    
    INDIAN RUPEE 
    The rupee edged higher as investors awaited
inflation data expected later on Monday, and a day ahead of
results from the elections in the southern state of Karnataka.
    Exit polls suggest Narendra Modi's BJP could emerge as the
leading party ahead of next year's general election.
 
    Inflation is expected to climb in April on the back of
higher oil prices, intensifying pressure on the Reserve Bank of
India (RBI) to hike rates, a Reuters poll showed.
    DBS in a note said it expects a more hawkish RBI, "with more
committee members expected to shift from the neutral to the
cautious camp."
    "India's consumer price index could remain sticky at around
4.5 percent year-on-year, but a downside surprise should be
Indian rupee positive, given that markets are fretting over a
hawkish RBI," Mizuho Bank added. 
    India, a net oil importer, has been particularly watchful
over rising oil prices and developments on Iran.

    INDONESIAN RUPIAH 
    Indonesia's rupiah slipped 0.3 percent to 13,985 a
dollar following several bomb attacks across the
country.  
    "Yesterday's terrorist bombings in Surabaya churches may
rattle the market," said Trimegah Securities in Jakarta, though
"expect any decline because of bombing to be very short-term." 
    With the rupiah hovering around 2018 lows, Moody's said the
weakness in the currency and interest rates would be "credit
negative" if it persists.
    Moody's comments come ahead of a central bank policy review
later in the week. Some analysts say they would not be surprised
to see an interest rate hike to support the currency, though
others believe such a move may already be priced in.

    "The Indonesian rupiah may outperform if Bank Indonesia
hikes rates by 25bps as we expect, giving teeth to their defence
against further rupiah depreciation," added Mizuho Bank in a
note.
  
CURRENCIES VS U.S. DOLLAR
 Change on the day at   0528 GMT                        
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    109.410     109.38        -0.03
 Sing dlr                     1.333       1.3360        +0.25
 Taiwan dlr                   29.719      29.773        +0.18
 Korean won                   1067.100    1069.3        +0.21
 Baht                         31.830      31.9          +0.22
 Rupiah                       13985.000   13945         -0.29
 Rupee                        67.283      67.33         +0.06
 Ringgit                      3.946       3.948         +0.05
 Yuan                         6.340       6.3323        -0.12
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    109.410     112.67        +2.98
 Sing dlr                     1.333       1.3373        +0.35
 Taiwan dlr                   29.719      29.848        +0.43
 Korean won                   1067.100    1070.50       +0.32
 Baht                         31.830      32.58         +2.36
 Rupiah                       13985.000   13565         -3.00
 Rupee                        67.283      63.87         -5.07
 Ringgit                      3.946       4.0440        +2.48
 Yuan                         6.340       6.5069        +2.63
 

 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Kim
Coghill)
  
 
 
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