February 21, 2018 / 6:47 AM / 6 months ago

EM ASIA FX-Most Asian currencies weaken as rising yields boost dollar

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Feb 21 (Reuters) - Most Asian currencies edged lower on
Wednesday as the dollar was bolstered by rising U.S. Treasury
yields and optimism ahead of Federal Reserve' last policy
meeting minutes, to be released later in the day.
    The dollar index was up 0.2 percent at 89.686. It is
up 1.6 percent from Friday's three-year low of 88.251.
    Andy Ji, a strategist for Commonwealth Bank of Australia in
Singapore, said rising U.S. Treasury yields will put pressure on
Asian currencies in coming months.
    "Market is looking at the threshold of 3 percent in 10-year
U.S. Treasury yield. If it reaches that level, there is going to
be a large risk reduction in the markets," Ji said.
    He added it will support the dollar against the Asian
    The U.S. 10-year Treasury yields were at 2.8877 percent in
Asian hours, hovering near a four-year peak. The rise in yields
came as investors made room for this week's deluge of $258
billion of government debt supply. [ US/ ]
    A MUFG report said the minutes of the Federal Reserve's last
policy meeting would be more hawkish and would support the
     "The minutes is likely to reveal an increase in the number
of FOMC participants that have incorporated fiscal stimulus in
their outlook, as opposed to “less than half” at the December
meeting," the report said.
     "These assessments are important as it would give us an
inkling of what the updated dot plot at the 21 March meeting may
be, with the possibility of an upward revision in the longer
term federal funds rate (FFR) projections." 
    In Asia, the South Korean won fell for the fourth
consecutive session, while the Malaysian ringgit, Indian
rupee and the Thai baht also declined.
    On Wednesday, South Korea's central bank chief said on
Wednesday the Bank of Korea is prepared to respond to any
negative impact from faster-than-expected policy tightening in
the United States.
    Bucking the trend, the Taiwan dollar and the
Philippine peso edged  higher.
    INDIAN RUPEE        
    The Indian rupee touched a three-month low of 64.94
per dollar.    
    The rupee has lost about 1 percent this week and is the
second worst performing Asian currency against the dollar this
    The recent losses were due to concerns over the country's
widening trade deficit and growing fallout from the $1.8 billion
Punjab National Bank fraud.    
    Exchange data showed total foreign investments in Indian
equities and bond markets have turned negative this month. 
    The Indonesian rupiah was up 0.07 percent on the
    Analysts said the rupiah rise was due to rupiah bonds'
eligibility to be included in the Bloomberg Barclays Global
Aggregate Bond Index from June 1, 2018.
    "We believe this is medium-term positive rupiah bonds, as it
will encourage a wider set of foreign investors to participate
in the rupiah bond market." said a Standard Chartered report.
     "Additional inflows in the coming months support our view
of slight rupiah appreciation as a means to contain inflationary
pressure. We forecast rupiah at 13,000 by mid-year." the report
    On Wednesday, Indonesia's central bank governor said it can
overcome the external pressures on rupiah. 
    The following table shows rates for Asian currencies against
the dollar at 0622 GMT.

   Change as of  0622                               
  Currency                 Latest  Previous      Pct
                              bid       day     Move
  Japan yen             107.700      107.31    -0.36
  Sing dlr              1.320        1.3190    -0.08
  Taiwan dlr            29.227       29.342    +0.39
  Korean won            1076.400     1073.5    -0.27
  Baht                  31.526        31.49    -0.11
  Peso                  52.100        52.24    +0.27
  Rupiah                13600.000     13610    +0.07
  Rupee                 64.820        64.79    -0.05
  Ringgit               3.907         3.902    -0.13
  Yuan                  6.345        6.3400    -0.08
  Change so far in                                  
  Currency              Latest     End 2017      Pct
                        bid                     Move
  Japan yen             107.700      112.67    +4.61
  Sing dlr              1.320        1.3373    +1.31
  Taiwan dlr            29.227       29.848    +2.12
  Korean won            1076.400    1070.50    -0.55
  Baht                  31.526        32.58    +3.34
  Peso                  52.100        49.93    -4.17
  Rupiah                13600.000     13565    -0.26
  Rupee                 64.820        63.87    -1.47
  Ringgit               3.907        4.0440    +3.51
  Yuan                  6.345        6.5069    +2.55
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Additional
Reporting by Gaurav Dogra; Editing by Kim Coghill)
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