September 11, 2017 / 7:03 AM / 6 months ago

EM ASIA FX-Most Asian currencies slip, yuan down as China relaxes hedging rules

 (Adds text, updates prices)
    By Christina Martin
    Sept 11 (Reuters) - Most Asian currencies edged down on
Monday, as the dollar bounced from a selloff after North Korea
marked the anniversary of its founding without resorting to any
further missile or nuclear tests.
    The dollar index, which tracks the U.S. unit against
a basket of six major currencies, was 0.2 percent higher at
91.522, after skidding to a 2-1/2 year low of 91.011 on Friday.
    The United States and its allies had been bracing for
another long-range missile launch, instead North Korea observed
the 69th anniversary of its founding on Saturday with a
celebration honouring the scientists behind the massive nuclear
test it conducted last week.
    "The dollar is rebounding from recent lows as geopolitical
tensions in the Korean peninsula subsides," said Christopher
Wong, senior FX strategist at Malayan Banking Bhd. 
    "There is also the news that the PBOC (Public Bank of China)
is unwinding reserve requirements on FX forwards. Signs of
growing discomfort with the yuan's pace of gains may suggest to
markets that an interim support for dollar-yuan could be forming
around 6.45 levels." 
    The People's Bank of China has scrapped reserve requirements
for financial institutions settling foreign exchange forward
yuan positions, it said in an emailed statement to Reuters.    
The central bank also said it has stopped requiring foreign
banks to put aside reserves for offshore yuan deposits in China.
    The relaxation of rules confirm earlier reports by Reuters.
    The Chinese yuan fell 0.3 percent, while the
ringgit was on track to snap four straight sessions of
gains, down 0.2 percent. 
    The Indian rupee and the Singapore dollar
also inched lower. 
    Bucking the trend, the Indonesian rupiah headed for a
third straight session of gains, up 0.3 percent for its highest
level in ten months. 
    "The rupiah hadn't quite adjusted while Asian ex-Japan
currencies had appreciated, so the (rupiah) move reflects the
currency playing catch up with the rest of the currencies," said
    The Korean won slipped 0.3 percent on Monday,
barely changed from Friday's close of 1,127.5, as the dollar
    September futures on three-year treasury bonds shed
0.01 point to 109.30.
    China's yuan was off 0.3 percent as investors
pondered the relaxation of rules on foreign exchange forward
    Market participants said the latest lifting of restrictive
measures on foreign exchange hedging and yuan deposits on
China's mainland suggested that the authorities were starting to
worry about the rapidly appreciating yuan.
    The yuan, which slumped 6.6 percent in 2016, has rallied
hard this year on the back of a series of capital control
measures as authorities sought to stabilise the currency.

    The following table shows rates for Asian currencies against
the dollar at 0535 GMT.
  Currency               Latest bid  Previous day  Pct Move
  Japan yen              108.36            107.83     -0.49
  Sing dlr               1.3427            1.3419     -0.06
  Taiwan dlr             30.015            30.006     -0.03
  Korean won             1131              1127.5     -0.30
  Baht                   33.129             33.09     -0.12
  Peso                   50.900             50.87     -0.06
  Rupiah                 13160              13200     +0.30
  Rupee                  63.85              63.78     -0.11
  Ringgit                4.199              4.192     -0.15
  Yuan                   6.505             6.4890     -0.24
  Change so far in 2017                                    
  Currency               Latest bid   End 2016     Pct Move
  Japan yen              108.36            117.07     +8.04
  Sing dlr               1.3427            1.4490     +7.92
  Taiwan dlr             30.015            32.279     +7.54
  Korean won             1131             1207.70     +6.79
  Baht                   33.129             35.80     +8.06
  Peso                   50.900             49.72     -2.32
  Rupiah                 13160              13470     +2.36
  Rupee                  63.850             67.92     +6.37
  Ringgit                4.199             4.4845     +6.81
  Yuan                   6.505             6.9467     +6.80


 (Reporting By Christina Martin in Bengaluru)
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