June 4, 2019 / 6:19 AM / 4 months ago

EM ASIA FX-Most Asian currencies firm as lower U.S. yields, Fed rate bets check dollar

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    June 4 (Reuters) - Most Asian currencies strengthened on
Tuesday as the dollar struggled in the face of falling Treasury
yields and growing expectations of a near-term interest rate cut
by the Federal Reserve. 
    The dollar slipped to a five-month low against the yen
earlier, setting the tone for much of the regional currencies. 
    The benchmark 10-year Treasury yield fell to its
lowest level since September 2017 overnight, coming within reach
of the 2% threshold after St. Louis Federal Reserve President
James Bullard said a rate cut "may be warranted soon" given the
rising risk to economic growth posed by global trade tensions as
well as weak U.S. inflation. 
    The strong "likelihood of Fed rate cuts has weighed on the
dollar, while boosting EM Asian currencies," said Qi Gao, Asia
FX Strategist at Scotiabank.
     Trade worries have taken a bit of a backseat for regional
currencies this week as investors focused on falling U.S. yields
and searched for better returns outside.   
    "We expect USD-Asia to have an easing bias for now, with the
weaker dollar likely to prevail," said Emmanuel Ng, an FX
strategist with OCBC Bank in a note.
    "However, with the fundamental picture of trade tensions and
economic slowdown still unchanged, we may not want to chase
USD-Asia lower on a multi-session horizon."
    The Thai baht, which resumed trading after a market
holiday on Monday, rose 1% and led regional gainers on the day.
    The Indian rupee tacked on 0.1 percent, helped by
strong inflows into the stock and bond markets thanks to
expectations of an interest rate cut by the Reserve Bank of
India (RBI) on Thursday. 
    India's exchange data showed foreigners bought $142.4
million worth of equities and  $275.1 million of bonds on
    "The RBI is expected to deliver a 25 bp rate cut on Thursday
afternoon, with the aim of stimulating India’s economic growth,"
said Scotiabank's Gao.
    Gao said a rate cut will boost Indian equities and bonds,
and expectations of more market oriented reforms by Indian Prime
Minister Narendra Modi’s second term meant more upside for the
    The Malaysian ringgit and Taiwan dollar also
edged higher on the day.
    On the other hand, the South Korean won dropped
after data showed the economy grew a revised 1.7 percent during
the first quarter, slower than a 1.8 percent rise estimated
    China's yuan edged lower on Tuesday, but the
Chinese central bank's firm fixing helped curb the fall.

    The following table shows rates for Asian currencies against
the dollar at 0535 GMT.
  Change on the day at                                
        0535 GMT                           
  Currency               Latest  Previous     Pct Move
                            bid       day  
  Japan yen             107.880    108.06        +0.17
  Sing dlr              1.368      1.3664        -0.15
  Taiwan dlr            31.439     31.503        +0.20
  Korean won            1181.90    1182.1        +0.02
  Baht                  31.360      31.67        +0.99
  Peso                  51.780      51.72        -0.12
  Rupee                 69.210      69.26        +0.07
  Ringgit               4.175        4.18        +0.12
  Yuan                  6.907      6.9030        -0.06
   *Indonesian markets                                
        are closed for                     
  Change so far in                                    
  Currency              Latest   End 2018     Pct Move
  Japan yen             107.880    109.56        +1.56
  Sing dlr              1.368      1.3627        -0.42
  Taiwan dlr            31.439     30.733        -2.25
  Korean won            1181.90   1115.70        -5.60
  Baht                  31.360      32.55        +3.79
  Peso                  51.780      52.47        +1.33
  Rupiah                14270.0     14375        +0.74
  Rupee                 69.210      69.77        +0.81
  Ringgit               4.175      4.1300        -1.08
  Yuan                  6.907      6.8730        -0.49

 (Reporting By Patturaja Murugaboopathy
Editing by Shri Navaratnam)
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