February 28, 2018 / 5:43 AM / 3 months ago

EM ASIA FX-Most Asian currencies lose ground as Powell debut supports dollar

    * Korean won falls more than 1 percent 
    * Malaysia's ringgit hits two-week low 

 (Adds text, updates prices)
    By Christina Martin
    Feb 28 - Most emerging Asian currencies fell on Wednesday,
while the dollar held firm near a three-week high after Federal
Reserve Chair Jerome Powell struck a hawkish tone in debut
Congressional testimony. 
    In his first public appearance as head of the U.S. central
bank, Powell vowed to prevent the economy from overheating while
sticking with a plan to gradually raise interest rates.

    The dollar index was steady at 90.40, after hitting a
high near 90.50 on Tuesday, its strongest level in almost three
    The Fed is expected to approve its first rate increase of
2018 at its next policy meeting in March, when it will also
provide updated economic projections.
    "The tone of Chair Powell's testimony suggests that on the
whole, the Fed policy isn't about to shift abruptly under his
leadership, and that the pace of gradual rate hikes will
continue to be the mainstay of the Fed narrative," said Stephen
Innes, head of trading for Asia Pacific at Oanda.
    Among Asian currencies, South Korea's won was the
biggest drag, falling as much as 1 percent, marking its biggest
intraday percentage loss in more than three weeks. 
    The Malaysian ringgit slipped as much as 0.5 percent
to its lowest in two weeks, while the Indonesian rupiah
and the Indian rupee both lost 0.3 percent. 
    The Thai baht slid as much as 0.5 percent, while
the Singapore dollar and the Philippine peso
inched down slightly. 
    The Chinese yuan lost 0.2 percent. 
    "I think the higher interest rate profile triggers
'risk-off' in equities, and higher bond yields in U.S. dent
regional bond sentiment - both negative for local currencies,"
said Innes. 
    Taiwan's financial markets were closed on Wednesday for 
Peace Memorial Day.
    The Korean won fell sharply against the U.S.
dollar on Wednesday, hit by Powell's comments that revived
concerns of faster-than-expected U.S. rate rises.
    The won was quoted at 1,080.1 per dollar on the onshore
settlement platform, 0.81 percent weaker than its previous close
at 1,071.3.
    China's yuan weakened against the U.S. dollar on Wednesday,
reflecting the greenback's gathering gained support from
Powell's hawkish tone.
    Growth in China's manufacturing sector in February dropped
to the lowest in more than 1-1/2 years, raising concerns of a
sharper-than-expected slowdown in the economy this year as
regulators tighten the screws on financial risks. 
    "Faster U.S. interest rate normalisation poses the greatest
challenge to regional currency sentiment," Oanda's Innes said,
"but to rub salt into the wounds, China's PMI dropped the most
in six years."  
    The Chinese currency was on course to show a fall over
February, its first month of losses since September.
    The following table shows rates for Asian currencies against
the dollar at 0513 GMT.
 Currency        Latest bid  Previous day  Pct Move
 Japan yen       107.190     107.31        +0.11
 Sing dlr        1.325       1.3242        -0.08
 Korean won      1083.200    1071.3        -1.10
 Baht            31.450      31.34         -0.35
 Peso            52.045      52.03         -0.03
 Rupiah          13712.000   13670         -0.31
 Rupee           65.073      64.87         -0.31
 Ringgit         3.923       3.906         -0.43
 Yuan            6.328       6.3170        -0.17
 Change in 2018                            
 Currency        Latest bid  End 2017      Pct Move
 Japan yen       107.190     112.67        +5.11
 Sing dlr        1.325       1.3373        +0.91
 Korean won      1083.200    1070.50       -1.17
 Baht            31.450      32.58         +3.59
 Peso            52.045      49.93         -4.06
 Rupiah          13712.000   13565         -1.07
 Rupee           65.073      63.87         -1.85
 Ringgit         3.923       4.0440        +3.08
 Yuan            6.328       6.5069        +2.83

 (Reporting By Christina Martin in Bengaluru
Editing by Eric Meijer)
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