May 16, 2018 / 6:18 AM / 4 months ago

EM ASIA FX-Rising U.S. yields weigh on most Asian currencies, rupee cuts losses

    * India's rupee pares losses after touching another over
1-yr low
    * Indonesian rupiah falls, eyes on central bank meet on
Thursday 
    * Thai c.bank expected to stand pat on rates, baht down 

 (Adds text, updates prices)
    By Nikhil Nainan
    May 16 (Reuters) - A surge in U.S. bond yields supported the
dollar on Wednesday and knocked most Asian currencies, with the
Thai baht and the Indonesian rupiah suffering the biggest
losses.
    A solid rise in U.S. consumer spending numbers sent long
term Treasury yields surging to a seven-year peak of 3.095
percent.
    "There's permanence building as waves of fresh dollar longs
hit the books," Stephen Innes, head of trading APAC at Oanda,
said in a note, as the greenback hovered around a
five-month high. 
    Denting risk was news that North Korea called off high-level
talks with Seoul, throwing into question June's planned historic
summit between Kim Jong Un and U.S. President Donald Trump.
Pyongyang denounced U.S.- South Korean military exercises as a
provocation. 
    "This will weigh on the Korean reconstruction beneficiaries
that have had a strong run on peace and even reunification hopes
recently," JPMorgan analysts wrote in a note.
    The South Korean won fell 0.3 percent to 1077.2
per dollar. 
    The Indian rupee recovered some losses following
Tuesday's volatile session, as suspected intervention by the
Reserve Bank of India for a second consecutive day stemmed the
rupee's fall.
     A senior dealer at a state-run bank, estimated that within
the first 10 minutes the RBI might have sold $300 million to
$400 million proactively to prevent any sharp fall in the rupee.
    Some dealers had anticipated that the RBI might refrain from
intervening on Wednesday as they suspected intervention on
Tuesday had failed to stop the rupee hitting its weakest level
since in over a year.
    The Karnataka state election that concluded on Tuesday
delivered a hung parliament with India's ruling BJP emerging as
the strongest party. The Karnataka elections are the first major
state election ahead of 2019 general elections.
    
    INDONESIAN RUPIAH
    The rupiah weakened to its lowest point in over
two-and-a-half years at 14,105, a day before a key central bank
policy decision. 
    Bank Indonesia is expected to hike its benchmark rate for
the first time since 2014 to support the rupiah and stabilise
domestic markets, a Reuters poll showed.
    Sean Yokota, head of Asia strategy at Skandinaviska Enskilda
Banken, believes the "hike is priced in and markets are watching
the forward guidance."
     "If they hike and say that's enough... the rupiah will keep
weakening," he said. "If they hike and say we are ready to hike
more, that should help the rupiah stabilize."
           
    THAI BAHT 
    Thailand's baht weakened 0.5 percent to 32.08 hours
ahead of a central bank meeting that is expected to keep rates
unchanged to support economic growth amid subdued inflation.

    "Despite inflation picking up to the fastest in more than a
year... we think Bank of Thailand is still expected to keep
policy rate unchanged for the time being," Mizuho Bank said.
    April's annual headline inflation was the highest in 40
months, but was still at the low end of the central bank target
range.

CURRENCIES VS U.S. DOLLAR
 Change on the day at   0528 GMT                        
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    110.260     110.34        +0.07
 Sing dlr                     1.343       1.3446        +0.15
 Taiwan dlr                   29.859      29.848        -0.04
 Korean won                   1077.200    1073.8        -0.32
 Baht                         32.080      31.92         -0.50
 Peso                         52.330      52.471        +0.27
 Rupiah                       14105.000   14032         -0.52
 Rupee                        67.820      68.07         +0.37
 Ringgit                      3.963       3.954         -0.23
 Yuan                         6.367       6.3725        +0.08
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    110.260     112.67        +2.19
 Sing dlr                     1.343       1.3373        -0.39
 Taiwan dlr                   29.859      29.848        -0.04
 Korean won                   1077.200    1070.50       -0.62
 Baht                         32.080      32.58         +1.56
 Peso                         52.330      49.977        -4.50
 Rupiah                       14105.000   13565         -3.83
 Rupee                        67.820      63.87         -5.82
 Ringgit                      3.963       4.0440        +2.04
 Yuan                         6.367       6.5069        +2.19
 
 (Reporting by Nikhil Kurian Nainan in Bengaluru)
  
 
 
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