January 9, 2020 / 6:47 AM / a month ago

EM ASIA FX-Most Asian currencies firmer as U.S.-Iran tensions abate

    * Safe-haven bets unwound 
    * Oil prices below pre-Soleimani killing levels
    * Focus turns to U.S.-China trade deal 

 (Adds text, updates prices)
    By Nikhil Nainan
    Jan 9 (Reuters) - Most Asian currencies rallied on Thursday
on signs that the United States and Iran were backing down from
further military conflict, encouraging investors to ditch
safe-haven assets and return to riskier bets.
    Tempering concerns of a further retaliation against Iran,
after it struck military bases housing U.S.-led troops in Iraq,
U.S. President Donald Trump said his country did not necessarily
have to hit back.
    The easing in tensions dealt a blow to the near week-long
rally in assets like gold and the Japanese yen,
considered safe-havens in times of heightened uncertainty.
    "The surprising lack of retaliation post the weekend threats
from the President were evidently taken well by the market,
returning investors to the positive conditions prior to the
breakout of this issue," Jingyi Pan, a market strategist with IG
in Singapore wrote in a note.  
    South Korea's won advanced 1% against the dollar,
the most among regional peers, as investors now shift focus back
to expectations around the signing of the Phase 1 U.S.- China
trade deal next week that could support the stuttering global
economy, especially those heavily reliant on trade. 
    However, risks still remain given that many key issues
between the top two global economies are yet to be hammered out.
    Oil prices have also fallen below the level it was at before
the Jan. 3 killing of Iranian military commander Qassem
Soleimani that sparked the stand-off. 
    Oil importers such as India and Indonesia saw their
currencies also gain, with the rupee and rupiah
 strengthening 0.4% and 0.3%, respectively. The
Indonesian unit climbed to its highest level since June 2018. 
    "The fact is that while there evidently remains risks that
Iran may have further scores to settle, the likelihood of this
playing out in an all-out war and posing a threat to oil supply
in the Middle East had significantly diminished," Pan added.  
    The yuan also scaled an over five-month peak
against the greenback, strengthening 0.2% to 6.93.
    Meanwhile, the only currency failing to mark gains on the
improved risk-appetite was the Philippine peso, which
weakened slightly to 50.595. 
 Change on the day at 0614 GMT                    
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              109.280     109.12        -0.15
 Sing dlr               1.350       1.3506        +0.04
 Taiwan dlr             29.973      30.087        +0.38
 Korean won             1158.900    1170.8        +1.03
 Baht                   30.285      30.35         +0.21
 Peso                   50.595      50.57         -0.05
 Rupiah                 13847.000   13885         +0.27
 Rupee                  71.405      71.69         +0.40
 Ringgit                4.087       4.1           +0.32
 Yuan                   6.930       6.9456        +0.23
 Change so far in 2020                            
 Currency               Latest bid  End 2019      Pct Move
 Japan yen              109.280     108.61        -0.61
 Sing dlr               1.350       1.3444        -0.42
 Taiwan dlr             29.973      30.106        +0.44
 Korean won             1158.900    1156.40       -0.22
 Baht                   30.285      29.91         -1.24
 Peso                   50.595      50.65         +0.11
 Rupiah                 13847.000   13880         +0.24
 Rupee                  71.405      71.38         -0.04
 Ringgit                4.087       4.0890        +0.05
 Yuan                   6.930       6.9632        +0.48
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Rashmi Aich)
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