March 6, 2020 / 6:44 AM / a month ago

EM ASIA FX-Most weaken as volatility steers investors away

    * Most set for weekly gains as Fed rate cut widens
differentials
    * S&P sees Asia-Pacific growth slowing to lowest rate since
2008
    * South Korean won set for best week since 2017, tracking
yuan  

 (Adds text, updates prices)
    By Nikhil Nainan
    March 6 (Reuters) - Most Asian currencies fell on Friday as
fears mounted of a deeper economic fallout from the coronavirus
outbreak, but were  on course to post weekly gains as the dollar
declined due to a surprise Fed rate cut and expectations of more
easing.
    Despite the widening appeal of Asian assets, investors have
largely stayed away due to heightened volatility amid fears the
worst is yet to come.
    Dragging down investor sentiment further, S&P Global Rating
estimated growth in the Asia-Pacific slowing to 4% this year,
the lowest rate since the global financial crisis, saying the
outbreak could cost economies in the region $211 billion. 
    "Sharply increased volatility in asset markets around the
world is forcing an unwind of carry trades," said Wei Liang
Chang, a Singapore-based macro strategist at DBS. 
    "Even if growth fundamentals remain steady, higher yielding
currencies such as INR and IDR might swing amidst lumpy
outflows."
    The Indonesian rupiah, one of the currencies favoured
in carry trades by some, weakened 0.8% on Friday but was set for
a weekly gain after a sharp drop last week. 
    Earlier in the day, Bank Indonesia sought to reassure
investors that the central bank was there and ready to intervene
in the spot market. The country suffered an exodus of capital
last week on fears over the spread of the virus.
    Barclays said in a note that it expected markets to focus on
relative vulnerabilities in the emerging market space, with 
Asia more exposed to travel and tourism disruptions. U.S.
10-year yields tumbled below 1% again overnight.
    China's yuan stayed on track for a second
straight weekly gain as Beijing's drastic measures to contain
the outbreak have helped stem its spread within the country.
    The yuan's relative stability has also helped South Korea's
won, which was poised for its best week since 2017.
    "The won has benefited from the yuan's stability, hopes of a
recovery in Chinese activity and a fiscal support package,"
Chang said, adding that DBS was still cautious about the
currency given the wider spread of the virus in South Korea.
    On Friday, the yuan weakened 0.3%, while the won lost 0.9%. 
   
    The Indian rupee, meanwhile, weakened 0.5%, putting
it on track for its worst week since 2013. 
    The ringgit fell 0.6%, while the Singapore dollar
 was down 0.2%. ING cut its annual growth forecast for the
city state to 0.3% from 1% and said a recession seemed
inevitable. 
    
 CURRENCIES VS U.S. DOLLAR
 Change on the day at 0514 GMT                    
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              105.780     106.16        +0.36
 Sing dlr               1.385       1.3827        -0.19
 Taiwan dlr             29.990      29.960        -0.10
 Korean won             1192.400    1181.2        -0.94
 Baht                   31.620      31.55         -0.22
 Peso                   50.770      50.84         +0.14
 Rupiah                 14270.000   14160         -0.77
 Rupee                  73.790      73.35         -0.60
 Ringgit                4.185       4.16          -0.60
 Yuan                   6.957       6.9368        -0.29
                                                  
 Change so far in 2020                            
 Currency               Latest bid  End 2019      Pct Move
 Japan yen              105.780     108.61        +2.68
 Sing dlr               1.385       1.3444        -2.95
 Taiwan dlr             29.990      30.106        +0.39
 Korean won             1192.400    1156.40       -3.02
 Baht                   31.620      29.91         -5.41
 Peso                   50.770      50.65         -0.24
 Rupiah                 14270.000   13880         -2.73
 Rupee                  73.790      71.38         -3.27
 Ringgit                4.185       4.0890        -2.29
 Yuan                   6.957       6.9632        +0.09
 
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Subhranshu Sahu)
  
 
 
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