March 4, 2020 / 6:41 AM / 25 days ago

EM ASIA FX-Most currencies strengthen following surprise Fed rate cut

    * U.S. Fed cuts interest rates by 50 bps
    * Malaysia Jan exports drop
    * S. Korea says will take steps to tackle coronavirus woes

    By Anushka Trivedi
    March 4 (Reuters) - Most Asian currencies strengthened on
Wednesday as a surprise 50 basis point rate cut by the U.S.
Federal Reserve overnight sent yield-seekers looking east, with
the Indonesian rupiah leading gains.
    Indonesia's finance minister affirmed that the rate cut
could trigger capital inflows to the country. Its currency
 strengthened as much as 1% against the dollar to 14,130
rupiah, while stocks climbed 2%.
    The interest rate differential caused by the surprise cut is
aiding gains in regional currencies against the dollar, said
Jingyi Pan, a Singapore-based market strategist with financial
services firm IG.     
    "The willingness of the Fed to show support here perhaps
also outlines the possibility of further monetary support coming
along," Pan added.
    The Fed lowered borrowing costs on Tuesday in a bid to
protect the world's largest economy from the coronavirus impact,
but the emergency move failed to spur confidence as U.S.
equities dropped on worries about a deeper, lasting slowdown.

    The dollar touched a five-month low against the safe-haven
Japanese yen. Yields on the U.S. benchmark 10-year
Treasury fell below 1% after the cut, reducing the
appeal of the greenback. 
    Among Asian currencies, the Chinese yuan
strengthened 0.6% after People's Bank of China set a firmer
midpoint rate. 
    The South Korean won hit an over two-week high,
firming 0.8%.
    The country's top financial authorities agreed to take bold,
pre-emptive measures, if needed, to tackle economic woes
stemming from the coronavirus, an official said.
    The Taiwan dollar, Philippine peso and Thai
baht advanced between 0.4% and 0.5% each.
    The Thai central bank joined a chorus of monetary
authorities promising measures to combat the coronavirus
fallout, following the Fed's emergency cut. The bank said it was
closely watching the situation and would act as appropriate.

    Data from Malaysia showed a drop in exports in January after
they saw a surprise rebound in the previous month.
    The ringgit gained 0.2%. 
    Adding to further political tumoil in the nation, its new
prime minister delayed the start of parliamentary proceedings by
two months, as the opposition sought to challenge his government
with a confidence vote.
    Indian services sector grew at its fastest pace in seven
years in February, bolstered by a recovery in foreign demand and
business confidence, a private survey showed.
    However, the Indian rupee fell 0.1% against the
    "The risk to further near-term rupee weakness is high,
especially given its seasonal weakness in the second-quarter,"
ANZ analysts said in a note.
    "The U.S. Federal Reserve's emergency 50bp cut yesterday
will not alter the rupee's trend," they added.
 Currency                     Latest bid  Previous day  Pct
 Japan yen                    107.390     107.12        -0.25
 Sing dlr                     1.388       1.3876        -0.01
 Taiwan dlr                   29.960      30.087        +0.42
 Korean won                   1185.700    1195.2        +0.80
 Baht                         31.380      31.53         +0.48
 Peso                         50.590      50.82         +0.45
 Rupiah                       1,4150.000  1,4275        +0.88
 Rupee                        73.345      73.25         -0.13
 Ringgit                      4.182       4.19          +0.19
 Yuan                         6.933       6.9761        +0.62
 Change so far in 2020                                  
 Currency                     Latest bid  End 2019      Pct
 Japan yen                    107.390     108.61        +1.14
 Sing dlr                     1.388       1.3444        -3.12
 Taiwan dlr                   29.960      30.106        +0.49
 Korean won                   1185.700    1156.40       -2.47
 Baht                         31.380      29.91         -4.68
 Peso                         50.590      50.65         +0.12
 Rupiah                       14150.000   13880         -1.91
 Rupee                        73.345      71.38         -2.68
 Ringgit                      4.182       4.0890        -2.22
 Yuan                         6.933       6.9632        +0.43
 (Reporting by Anushka Trivedi in Bengaluru;
Editing by Vinay Dwivedi)
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