March 23, 2018 / 5:17 AM / 4 months ago

EM ASIA FX-Most currencies soften as trade war fears grow

    * Sing. dollar, yen rise on safe haven buys
    * S. Korean won leads losses
    * Rupiah drops while Cen. Bank stays pat

 (Adds details, updates prices)
    By Ambar Warrick
    March 23 (Reuters) - Most Asian currencies softened on
Friday as investors fled riskier assets after a volley of
threats between the United States and China escalated fears of a
global trade war. 
    Markets had already been skittish ahead of proposed U.S.
steel and aluminum tariffs due to come into effect on Friday,
although six countries and the European Union were granted
temporary exemption.
    President Donald Trump signed a presidential memorandum on
Thursday that could impose tariffs on up to $60 billion of
imports from China, while the Chinese commerce ministry unveiled
plans to levy duties on up to $3 billion of select U.S. imports.

    "Most Asian currencies depreciated this week, caught between
heightened US-led global trade tensions and a mildly hawkish Fed
hike outlook. Although protectionism has yet to dampen the
global economic outlook, it has started to incrementally weigh
on business and investor sentiment," DBS said in a note.
    As such, safe haven buys like the Japanese yen and
the Singapore dollar rose. Gold prices were also
higher.
    Equity markets took a large hit from the news, while the
dollar extended losses. Asian units however, failed to
capitalize on the dollar weakness.
    The South Korean won fell about 0.7 percent to a
near 3-week low against the dollar. The currency was on track
for its worst week since early February. 
    South Korean shares fell to a two-week low. 
    Sentiment was further soured after Trump replaced H.R.
McMaster as national security adviser with John Bolton, a hawk
who has advocated using military force against North Korea and
Iran.
    The Indonesian rupiah fell about 0.3 percent to the
dollar, and was on track to end the week 0.3 percent lower. 
    Indonesia's central bank on Thursday kept its policy rate
unchanged, as expected, and said it remained committed to
maintaining a presence in the foreign-exchange market to
stabilise the rupiah, which is among the worst performing
currencies for the year.
    On the other hand, the Singapore dollar benefitted from safe
haven buying, rising about 0.1 percent. The currency has shown
steady growth in 2018, bolstered by strong economic fundamentals
in the island state, particularly a strong trade balance. 
    Singapore's core inflation picked up slightly more than
expected in February to a 10-month high, data showed on Friday,
adding to the debate over whether the Monetary Authority of
Singapore may consider tightening policy at its review next
month.
    
    ASIAN CURRENCIES SEEN SOFTENING FURTHER
    Investors increased their bearish bets on the Indian rupee
to the highest since 2016, while trimming their long positions
in other Asian currencies over the past two weeks, a Reuters
poll showed.
    Long positions in the Malaysian ringgit decreased and
were at their lowest in five months, while long positions in the
South Korean won and the Singapore dollar too were scaled back.
    Bearish bets on the Indian rupee were at their
highest since November 2016 as concerns about the country's
swelling current account deficit weighed. 
    The rupee, which fell about 0.1 percent, has also been
wracked by a major banking scandal in the country, which
prompted investment bank Goldman Sachs to cut its forecasts for
India's economy.
    The following table shows rates for Asian currencies against
the dollar on Friday.

    CURRENCIES VS U.S. DOLLAR
 Change on the day at   0459 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              104.830     105.26        +0.41
 Sing dlr               1.316       1.3167        +0.06
 Taiwan dlr             29.173      29.153        -0.07
 Korean won             1080.700    1072.7        -0.74
 Baht                   31.240      31.255        +0.05
 Peso                   52.315      52.2          -0.22
 Rupiah                 13790.000   13750         -0.29
 Rupee                  65.145      65.10         -0.07
 Ringgit                3.915       3.912         -0.08
 Yuan                   6.331       6.3288        -0.03
                                                  
 Change so far in 2018                            
 Currency               Latest bid  End 2017      Pct Move
 Japan yen              104.830     112.67        +7.48
 Sing dlr               1.316       1.3373        +1.63
 Taiwan dlr             29.173      29.848        +2.31
 Korean won             1080.700    1070.50       -0.94
 Baht                   31.240      32.58         +4.29
 Peso                   52.315      49.93         -4.56
 Rupiah                 13790.000   13565         -1.63
 Rupee                  65.145      63.87         -1.96
 Ringgit                3.915       4.0440        +3.30
 Yuan                   6.331       6.5069        +2.78
 
 (Reporting by Ambar Warrick in Bengaluru, Editing by Kim
Coghill)
  
 
 
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