March 12, 2020 / 7:32 AM / 16 days ago

EM ASIA FX-Most currencies weaken as rate-cut bets rise in Asia

    * S.Korean won loses 1%, most among Asian currencies
    * More easing from central banks expected - DBS analysts
    * Markets pricing in 100 basis point cut by U.S. Fed

 (Adds text, updates prices)
    By Anushka Trivedi
    March 12 (Reuters) - Most Asian currencies weakened on
Thursday, as expectations rose for rate cuts by central banks in
the region after world health officials called the coronavirus
outbreak a pandemic.
    Rattling already nervy markets, U.S. President Donald Trump
suspended travel from most European countries for a month, which
threatens to cause more disruptions to trade and the world
    Following the news, odds of a one percentage point cut to
interest rates at the Federal Reserve's policy review next week
climbed, while the dollar declined 1% against the yen and
the 10-year U.S. Treasuries yield fell slightly.

    DBS analysts said in a note that more easing could be
expected from central banks over the next few weeks, including
in emerging markets.
    The Indonesian, Taiwan and Philippine central banks are set
to hold their monetary policy meetings next week.
    "With financial conditions still tight, we suspect that
several 2008-09 crisis era options will also be explored," they
    Singapore's president said the city-state would consider
tapping national reserves to fund a second economic package,
which would be the first such move since 2009.
    Several economists have trimmed their 2020 growth forecasts
for the trade-reliant economy, citing disruption from the
epidemic and weakness in the local dollar.
    This could see its central bank re-centre the Singapore
dollar-NEER policy band lower, DBS analysts said. SGD-NEER
refers to the exchange rate of the Singapore dollar managed
against a trade-weighted basket of currencies. 
    The Singapore dollar was trading 0.4% lower, while
the Indonesian rupiah weakened 0.9% to 14,465 against
the dollar. 
    Indonesia's central bank acted on its promised intervention
to steady the currency amid capital outflows by purchasing 4
trillion rupiah ($276.53 million) worth of government bonds in
an auction.
    Bank Indonesia may conduct a second auction later in the
afternoon session, an official said.  
    Other Asian currencies also took a bearing, with the Indian
rupee and the Thai baht sliding 0.7% and 0.4%,
    South Korea, the country with the largest outbreak in Asia
outside China, saw its currency weaken 1%, the most
among Asian currencies.        
    The Philippine peso dropped 0.6% after the senate
went into lockdown on Thursday, with President Rodrigo Duterte
set to undergo testing for the virus.
    Investors now await a meeting of the European Central Bank
(ECB), which is all but certain to unveil new stimulus measures
later in the day, after the Bank of England surprised markets
with a 50 basis point rate cut on Wednesday.
    Some analysts have questioned the effectiveness of these
rate cuts, saying they "may provide a temporary relief in the
credit markets, but will not solve the underlying issue of the
rapidly spreading virus around the world", CMC Markets Singapore
analyst Margaret Yang Yan said. 
    ($1 = 14,465.0000 rupiah)   
    The following table shows rates for Asian currencies against
the dollar at 0537 GMT.
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    103.970     104.53        +0.54
 Sing dlr                     1.401       1.3950        -0.42
 Taiwan dlr                   30.138      30.095        -0.14
 Korean won                   1205.100    1193          -1.00
 Baht                         31.550      31.41         -0.44
 Peso                         50.940      50.63         -0.61
 Rupiah                       14465.000   14340         -0.86
 Rupee                        74.145      73.65         -0.67
 Ringgit                      4.250       4.237         -0.31
 Yuan                         6.975       6.9603        -0.21
 Change so far in 2020                                  
 Currency                     Latest bid  End 2019      Pct Move
 Japan yen                    103.970     108.61        +4.46
 Sing dlr                     1.401       1.3444        -4.03
 Taiwan dlr                   30.138      30.106        -0.11
 Korean won                   1205.100    1156.40       -4.04
 Baht                         31.550      29.91         -5.20
 Peso                         50.940      50.65         -0.57
 Rupiah                       14465.000   13880         -4.04
 Rupee                        74.145      71.38         -3.73
 Ringgit                      4.250       4.0890        -3.79
 Yuan                         6.975       6.9632        -0.17

 (Reporting by Anushka Trivedi in Bengaluru; Editing by
Subhranshu Sahu)
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