February 12, 2018 / 5:44 AM / 5 months ago

EM ASIA FX-Recovery in regional equities buoy Asian currencies

 (Adds text, updates prices)
    By Aditya Soni
    Feb 12 (Reuters) - Most Asian currencies firmed against the
U.S. dollar on Monday, as regional equities gained following a
rise in S&P futures, while the greenback slipped after U.S.
Congress signed a deal that will push budget deficits past $1
trillion annually.
    Asian share markets showed signs of recovery on Monday from
a dramatic sell-off last week, though investors remained
cautious ahead of U.S. inflation data on Wednesday.
    MSCI's broadest index of Asia-Pacific shares outside Japan
 rose 1 percent, as S&P futures extended their
bounce after a burst of buying on Wall Street on Friday.
    "The more positive close to U.S. markets on Friday night has
seen a bit of a relief coming through markets, so we are seeing
a bit more of a retracement after last-week's sell-offs and that
has been the main driver for Asian currencies, supported by the
rise in Asian equities," said Khoon Goh, head of Asia research
at ANZ Banking Group (Singapore). 
    "The U.S. dollar weakening is also reflecting the fact that
the U.S. fiscal deficit is now set to widen, following the
passsage of the recent budget deal, that's also helped to
benefit Asian currencies." 
    The dollar index fell 0.3 percent against a basket of
currencies on Monday. A brief U.S. government shutdown ended on
Friday after Congress passed and President Donald Trump signed
into law a temporary spending deal expected to push budget
deficits past $1 trillion annually.
    The Korean won led the gains among regional 
currencies as it strenghthened 0.8 percent, in tandem with the
KOSPI stock index which rose 1.3 percent.
    The Singapore dollar firmed 0.3 percent, its biggest
intraday percentage gain in nearly three-weeks. 
    Taiwanese dollar also strengthened 0.3 percent.
Taiwan's benchmark stock index rose 1 percent on Monday,
propped up by information technology stocks, after losing 6.8
percent last week. 
    The Thai baht firmed 0.3 percent, while the
Malaysian ringgit strenghtned slightly. 
    Bucking the trend in the region, the Chinese yuan
slipped 0.1 percent. 
    The recent strength in the yuan has sparked speculation that
the People's Bank of China could reinstate the "counter-cyclical
factor", a discretionary factor it introduced into the yuan
midpoint formula last year to contain the currency's decline.

    The Indian rupee followed the trend in the region,
as it firmed 0.2 percent ahead of release of inflation data
later in the day. 
    Retail inflation in India is expected to have softened only
slightly last month from a 17-month high hit in December,
according to a Reuters poll, offering little relief to
policymakers mindful of the tentative economic recovery.

    The Reserve Bank of India kept its key policy rates
unchanged on Wednesday and retained its "neutral" stance in an
attempt to maintain a delicate balancing act and nurture growth.
    The Philippine peso weakened 0.3 percent, the
most in the region, and was on track to extend losses to a third
consecutive session.
    "The peso has weakened and that follows on from last week's
record trade deficit that was reported, so the detoriating
external position on the Philippines continues to weigh on the
peso," ANZ's Goh said. 
    Trade data for December 2017 ensured the full-year trade
deficit widened to a record of $29.8 billion as imports for the
year jumped 10.2 percent, stoking concerns that its current
account balance would deteriorate further and put more pressure
on the already-weak peso.
    The following table shows rates for Asian currencies against
the dollar at  0514 GMT.
 Change on the day                                      
 Currency                     Latest bid  Previous day  Pct Move
 Sing dlr                     1.326       1.3294        +0.25
 Taiwan dlr                   29.317      29.407        +0.31
 Korean won                   1083.700    1092.1        +0.78
 Baht                         31.630      31.72         +0.28
 Peso                         51.640      51.48         -0.31
 Rupiah                       13623.000   13625         +0.01
 Rupee                        64.295      64.40         +0.16
 Ringgit                      3.932       3.937         +0.13
 Yuan                         6.306       6.2969        -0.14
 Change so far                                          
 Currency                     Latest bid  End 2017      Pct Move
 Sing dlr                     1.326       1.3373        +0.84
 Taiwan dlr                   29.317      29.848        +1.81
 Korean won                   1083.700    1070.50       -1.22
 Baht                         31.630      32.58         +3.00
 Peso                         51.640      49.93         -3.31
 Rupiah                       13623.000   13565         -0.43
 Rupee                        64.295      63.87         -0.66
 Ringgit                      3.932       4.0440        +2.85
 Yuan                         6.306       6.5069        +3.19

 (Reporting by Aditya Soni in Bengaluru; Editing by Kim Coghill)
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