April 6, 2018 / 5:47 AM / 4 months ago

EM ASIA FX-Most Asian currencies falter as new U.S. tariff threats heighten risk aversion

 (Adds text, updates prices)
    By Rushil Dutta
    April 6 (Reuters) - Most Asian currencies were weaker on
Friday as U.S. President Donald Trump's latest salvo in his
trade standoff with China sapped risk appetite and kept global
markets on edge.
    Investors sought refuge in traditional safe havens like the
Japanese yen and gold after Trump said late Thursday that
he had instructed U.S. trade officials to consider $100 billion
in additional tariffs on China. 
    The latest news comes as investors had hoped an all-out
trade between the two world economic superpowers can be averted 
after conciliatory signals from Washington. Most emerging assets
gained in the previous session.
    The dollar index was slightly lower in Asia trading.
    OCBC analysts said in a note to clients that the 
"ratcheting up in trade rhetoric" wasn't a good sign for risk
    "Asian bourses may tread cautiously today, with investors
still finely tuned to the twists and turns in the US-China trade
tensions, ahead of the key US nonfarm and unemployment report."
    While broader Asian stocks, excluding their Japanese
counterparts, posted minor gains, Korea's
benchmark equity index Kospi slipped 0.6 percent. Most
South Asian equity markets saw lacklustre trading.
    The Korean won, sensitive to its local equity
market performance, weakened the most in the region with a 0.7
percent decline.
    On the week, it was set to fall 0.4 percent. 
    However, a recent Asia forex positioning poll conducted by
Reuters saw bullish sentiment for the won at its strongest since
the beginning of the year and among its peers.
    The won owes much of the improved sentiment to a
renegotiated trade deal between the South Korea the United
States called KORUS. The won continues to be on the U.S.
currency monitoring list.
    The Singapore dollar and the Indonesian rupiah
 slipped about 0.1 percent each. Both currencies are
headed for weekly losses.
    The Philippine peso, however, bucked the trend and
was set for a 0.1 percent gain this week.
    Chinese, Taiwanese and Thai financial markets were closed
for holidays.
    The Malaysian ringgit was subdued, with investors
keeping a close watch on political developments.
    As expected earlier in the session, Prime Minister Najib
Razak announced the dissolution of parliament on Friday over two
months before the end of his term, making way for a general
   The Indian rupee was slightly weaker, with losses
capped by unexpected downward revision of inflation forecasts by
the Reserve Bank of India in its policy meeting on Thursday,
when it held rates steady.     
   The lowering of inflation forecast to a range of 4.7-5.1
percent from 5.1-5.6 percent has raised hopes that the RBI will
hold policy for the rest of the year.
    A Reuters positioning poll showed improved sentiment for the
rupee in the past two weeks, with bearish bets on the currency

 Change on the day at 0505 GMT                    
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              107.33      107.37        0.04
 Sing dlr               1.317       1.316         -0.11
 Korean won             1067.2      1059.7        -0.7
 Peso                   52.109      52.115        0.01
 Rupiah                 13775       13764         -0.08
 Rupee                  64.995      64.97         -0.05
 Ringgit                3.867       3.865         -0.05
 Change so far in 2018                            
 Currency               Latest bid  End 2017      Pct Move
 Japan yen              107.33      112.67        4.98
 Sing dlr               1.317       1.3373        1.51
 Korean won             1067.2      1070.5        0.31
 Peso                   52.109      49.93         -4.18
 Rupiah                 13775       13565         -1.52
 Rupee                  64.995      63.87         -1.73
 Ringgit                3.867       4.044         4.58
 (Reporting by Rushil Dutta in Bengaluru
Editing by Shri Navaratnam)
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