May 31, 2018 / 6:11 AM / 24 days ago

EM ASIA FX-Most Asian currencies rise on dollar weakness; rupiah up after 2nd rate hike

    * China's yuan up after positive 
    * Indonesian rupiah rises to 1 month high

 (Adds text, updates prices)
    By Susan Mathew
    May 31 (Reuters) - Most Asian currencies recovered on
Thursday as the dollar dipped and the euro gained after news
that Italy's political turmoil may be easing with the resumption
of coalition talks between anti-establishment parties. 
    Global sentiment was battered on Wednesday when Italy seemed
to be heading for a repeat election after the inconclusive vote
in March. 
    The euro, which fell to 10-month lows on Wednesday, gained
on Thursday after coalition talks reduced the odds of a second
election this year. 
    The dollar index was 0.1 percent lower at 0520 GMT

    Among regional currencies, the South Korean won
rose 0.5 percent with April industrial output and retail sales
data being more or less positive, while the Thai baht
strengthened after two days of losses. 
    The Indian rupee, however, slipped sightly ahead of
fourth-quarter economic growth data to be out later in the day.
    A Reuters poll suggested that India likely retained its
position as the world's fastest-growing economy with the growth
rate expected to come in at 7.3 percent.        
    Mizuho Bank said despite expectations of a rise in gross
domestic product, "heady oil prices may be dulling economic
momentum, driving up business costs, denting discretionary
    It noted that faster inflation and a wider current account
deficit could undermine foreign investor confidence.
    The Chinese yuan rose on Thursday after four
straight sessions of losses.
     A survey found China's May manufacturing sector grew at its
fastest pace in eight months, smashing analysts' expectations of
a dip. 
    However, the sustainability of this growth remains under
review as Sino-U.S. trade tensions continue to simmer. 
    The yuan dipped on Wednesday after White House said it would
press ahead with tariffs on $50 billion worth of imports from
China if Beijing did not address the alleged theft of American
intellectual property. 
    The rupiah climbed the most in the region after the
central bank raised the benchmark interest rate for the a second
time in two weeks and signalled more could be in the offing.
    Bank Indonesia raised interest rates by 25 basis points to
4.75 percent in an out-of-cycle meeting on Wednesday after
hiking it earlier this month to help the depreciating rupiah and
curb capital outflows. The rupiah was then languishing at 2-1/2
year lows.
    "This move was welcomed by investors as the new governor
tries to instil confidence in rupiah assets," DBS Group Research
said in a note. 
    "Outflows from foreign investors amid lacklustre emerging
market sentiment have pushed local government bond yields up
sharply over the past few months while rupiah weakness has also
come to the fore.
    "That said, we turned positive on rupiah assets last Friday
noting that there is value at current levels."
    The rupiah reached 13,880 on Thursday, its highest level
since April 30, and is set to log a monthly gain after three
declining months. 
 Change on the day at 0520 GMT                     
 Currency                Latest bid  Previous day  Pct Move
 Japan yen               108.670     108.9         +0.21
 Sing dlr                1.339       1.3389        +0.03
 Taiwan dlr              29.950      30.050        +0.33
 Korean won              1075.200    1080.9        +0.53
 Baht                    31.980      32.1          +0.38
 Peso                    52.525      52.503        -0.04
 Rupiah                  13890.000   13985         +0.68
 Rupee                   67.460      67.43         -0.05
 Ringgit                 3.975       3.987         +0.30
 Yuan                    6.407       6.4218        +0.23
 Change so far in 2018                             
 Currency                Latest bid  End 2017      Pct Move
 Japan yen               108.670     112.67        +3.68
 Sing dlr                1.339       1.3373        -0.09
 Taiwan dlr              29.950      29.848        -0.34
 Korean won              1075.200    1070.50       -0.44
 Baht                    31.980      32.58         +1.88
 Peso                    52.525      49.977        -4.85
 Rupiah                  13890.000   13565         -2.34
 Rupee                   67.460      63.87         -5.32
 Ringgit                 3.975       4.0440        +1.74
 Yuan                    6.407       6.5069        +1.55

 (Reporting by Susan Mathew in Bengaluru;)
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