February 13, 2018 / 5:51 AM / 3 years ago

CORRECTED-EM ASIA FX-Most Asian currencies firm as global risk appetite returns

 (Removes reference to Taiwan stock index in 9th graf as markets
are closed)
    * Rally in Asian stocks boosts regional sentiment
    * Thai baht firms the most
    * Philippine peso bucks strengthening trend

    By Aditya Soni
    Feb 13 (Reuters) - Most Asian currencies gained ground
against the U.S. dollar on Tuesday as global risk sentiment rose
after world equities showed a semblance of calm, while the
greenback was on the defensive on worries about its receding
yield advantage.
     Asian stocks rallied on Tuesday, tracking Wall Street's
extended rebound from last week's steep fall, with MSCI's
broadest index of Asia-Pacific shares outside Japan
 climbing 1.4 percent.
    "Equity markets have begun the week on a somewhat positive
note, picking up from a Friday rebound as bargain hunters have
returned on the first sign of stability," Stephen Innes, head of
trading for Asia Pacific at Oanda said in a note.
    Meanwhile, the dollar index dipped 0.2 percent,
having fallen 0.26 percent on Monday.
    "The US dollar traded lower as currency traders are
analysing the rebounding global equity markets," added Innes.
    Innes noted that the greenback has started the week with low
trading momentum as investors are looking forward to U.S.
inflation data expected later in the week.
    Higher inflation could trigger faster policy tightening by
the U.S. Federal Reserve. However, if the Fed doesn't act fast
enough and falls behind the curve on policy, it could end up
pushing up long-term bond yields.
    The Korean won strengthened 0.2 percent, in
tandem with the KOSPI stock index which rose as much as
1.5 percent, its biggest intraday percentage gain in 18 weeks. 
    Across the East China Sea, Taiwan's dollar
strengthened 0.1 percent. 
    The Chinese yuan traded flat after the central
bank lowered its official yuan midpoint to the weakest level in
more than two weeks on Tuesday.
    Earlier in the day, the People's Bank of China said it
injected 393 billion yuan ($62.14 billion) into the financial
system via one-year medium-term lending facility (MLF) loans,
with interest rates unchanged.
    The Philippine peso was only regional currency to
weaken and was on track to extend losses to a fourth consecutive
    The peso, one of the worst-performing Asian currencies of
2017 has been under pressure from a growing trade deficit. 
    The Malaysian ringgit firmed slightly ahead of growth
data due on Wednesday. 
    Malaysia's economy was seen likely to have grown more slowly
in the last quarter of 2017 than the blistering pace set in
July-September, a Reuters poll showed, as exports decelerated.

    "While March rate hike expectations are low due to the
dovish inflation overtones expressed by Bank Negara Malaysia in
January, but a notable above-consensus print on this week's
GDP will increase the odds of a rate hike later in 2018 and
strengthen the ringgit," said Oanda's Innes. 
    The Singapore dollar also strengthened slightly ahead
of fourth-quarter GDP data due on Wednesday.
    The economy is forecast to have expanded less than initially
expected in the last quarter of 2017 as factory activity and
exports eased, suggesting the recent moderation in booming sales
of electronics could be a drag on growth this year.
    A Reuters poll on Monday predicted quarter-on-quarter growth
at 2.0 percent in the October-December period on a seasonally
adjusted and annualised basis, slowing from the 2.8 percent
preliminary figure. 

    The Thai baht led the gains among regional
currencies as it firmed 0.7 percent, its biggest intraday
percentage gain in nearly three weeks. 
    Thailand's central bank is expected to leave its policy rate
unchanged on Wednesday, near record lows, as the economy gains 
traction but inflation and domestic demand stay soft.

    The following table shows rates for Asian currencies against
the dollar at 0515 GMT.
 Change on the day                                      
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    108.280     108.64        +0.33
 Sing dlr                     1.322       1.3229        +0.08
 Taiwan dlr                   29.359      29.400        +0.14
 Korean won                   1082.300    1084.6        +0.21
 Baht                         31.470      31.69         +0.70
 Peso                         51.850      51.77         -0.15
 Rupiah                       13635.000   13655         +0.15
 Ringgit                      3.931       3.937         +0.15
 Yuan                         6.325       6.3268        +0.03
 Change so far                                          
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    108.280     112.67        +4.05
 Sing dlr                     1.322       1.3373        +1.17
 Taiwan dlr                   29.359      29.848        +1.67
 Korean won                   1082.300    1070.50       -1.09
 Baht                         31.470      32.58         +3.53
 Peso                         51.850      49.93         -3.70
 Rupiah                       13635.000   13565         -0.51
 Ringgit                      3.931       4.0440        +2.87
 Yuan                         6.325       6.5069        +2.88

 (Reporting by Aditya Soni in Bengaluru; Editing by Eric Meijer)
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