April 4, 2018 / 5:22 AM / 2 years ago

EM ASIA FX-Most currencies firm as US-China trade tensions pressure dollar

    * EMFX risk sentiment slightly improves 
    * Indian rupee biggest advancer, hits 1-week high
    * Korean won weakest performer in region 

 (Adds text, updates prices)
    By Christina Martin
    April 4 (Reuters) - Most emerging Asian currencies edged
higher on Wednesday as the dollar was shackled by worries that
escalating U.S.-China trade tensions could dent global growth
and drag on the U.S. economy.
    The U.S. currency has lost about 2.2 percent against a
basket of six major currencies so far this year, with trade
tensions adding to earlier concerns that Washington might pursue
a weak dollar strategy and the perceived erosion of its yield
advantage.
    The Trump administration announced 25 percent tariffs on $50
billion of annual imports from China, covering around 1,300
industrial technology, transport and medical products. China's
commerce ministry immediately warned it was preparing
countermeasures of equal intensity.
    Against a basket of six major currencies, the dollar
last traded at 90.133, having edged back from Tuesday's near
two-week high of 90.275.
    "Risk sentiment has improved overnight, at least for today,
as investors put the fear of an escalating trade war on the back
burner. Local currencies are trading with a very robust
correlation to risk which is being driven by trade rhetoric,"
said Stephen Innes, head of trading in Asia-Pacific for Oanda in
Singapore. 
    "U.S.-China trade tensions will continue to weigh on
regional bourses and causing local currencies, for the most
part, to trade in tight ranges on lower inflow."
    Among Asian currencies, India's rupee was the
biggest gainer, up as much as 0.2 percent to a one-week high. 
    The Philippine peso and the Indonesian rupiah
posted marginal gains, while the Thai baht and the
Malaysian ringgit remained little changed. 
    The Singapore dollar inched up as much as 0.1
percent before creeping down slightly. 
    Nine of 15 analysts in a Reuters poll said their baseline
expectation is for the Monetary Authority of Singapore (MAS) to
tighten its exchange-rate based policy at its semiannual policy
review, expected to be announced in mid-April. 
    If the MAS tightens policy next month, it would mark the
central bank's first such move since April 2012 when it
increased the slope of the band slightly.
    "My view is that the trade war will keep the local central
bank on a neutral track. I think MAS will tighten policy this
year, but will take a wait-and-see approach to trade, and less
than convincing inflation signals no shift for now," said Innes.
    South Korea's won was the biggest loser in the
region, down as much as 0.4 percent. 
    Innes said the won was paring gains ahead of this week's key
U.S. non-farm payrolls data and expects other regional
currencies to reverse out some risk ahead of data on Friday.
    China's yuan was off as much as 0.1 percent. 
    Markets in Taiwan were closed for a holiday. 
    
    YUAN
    The Chinese yuan eased against the dollar after the central
bank set a weakened official guidance rate, with traders keeping
a watchful eye on the escalating U.S.-China trade spat. 
    In the spot market, the onshore yuan opened at
6.2895 per dollar and was changing hands at 6.2911 at midday, 51
pips weaker than the previous late session close.

    The following table shows rates for Asian currencies against
the dollar at 0455 GMT.
    CURRENCIES VS U.S. DOLLAR
    
 Change on the day at   0455 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              106.520     106.59        +0.07
 Sing dlr               1.312       1.3114        -0.02
 Korean won             1057.100    1054.2        -0.27
 Baht                   31.190      31.18         -0.03
 Peso                   52.025      52.08         +0.11
 Rupiah                 13755.000   13763         +0.06
 Rupee                  64.900      65.01         +0.17
 Ringgit                3.863       3.864         +0.03
 Yuan                   6.291       6.2860        -0.08
                                                  
 Change so far in 2018                            
 Currency               Latest bid  End 2017      Pct Move
 Japan yen              106.520     112.67        +5.77
 Sing dlr               1.312       1.3373        +1.95
 Korean won             1057.100    1070.50       +1.27
 Baht                   31.190      32.58         +4.46
 Peso                   52.025      49.93         -4.03
 Rupiah                 13755.000   13565         -1.38
 Rupee                  64.900      63.87         -1.59
 Ringgit                3.863       4.0440        +4.69
 Yuan                   6.291       6.5069        +3.43
 

 (Reporting By Christina Martin in Bengaluru
Editing by Shri Navaratnam)
  
 
 
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