July 3, 2018 / 5:41 AM / 4 months ago

EM ASIA FX-Trade jitters depress Asian currencies, yuan falls past 6.7/dlr

    * Trade war tensions ravage Chinese yuan and stocks
    * U.S. to impose tariffs on $34 bln of Chinese exports on
July 6
    * Soft S.Korean inflation lowers chance of tighter monetary
policy

 (Adds text, updates prices)
    By Aditya Soni
    July 3 (Reuters) - Asian currencies tumbled on Tuesday as
investors remained on edge ahead of a U.S. move later this week
to impose tariffs on $34 billion in Chinese exports to the
United States.
    The sell-off in the Chinese yuan continued as it
slipped past the 6.7 per dollar mark for the first time in
nearly a year.
    The People's Bank of China (PBOC) set the midpoint
 roughly in line with market expectations before the
market open, at 6.6497 yuan per dollar, its weakest fixing in
about 10 months.
    Trade tensions also battered Chinese stocks, with the
Shanghai Composite Index dipping 1.9 percent to hit a
fresh 28-month low. In Hong Kong, the Hang Seng index
slumped 3.3 percent to its lowest in 10 months.
    Meanwhile, in an effort to alleviate market concerns, the
country's foreign exchange regulator said China was confident of
maintaining stability in the yuan and keeping it at a
'reasonable' level.  
    "An all-out trade war, under which all goods traded between
China and the U.S. are subject to 15-25 percent tariffs, would
hurt the two economies' GDP growth rates mildly (quarter
percent) in 2018 and substantially in 2019 (more than half a
percent)," said Taimur Baig, Deutsche Bank's chief economist for
Asia, in a note.
    Baig added "this would set off a major global chain
reaction. Given their trade open-ness and exposure to the
electronics supply chain, there will be no respite whatsoever
for Malaysia, Singapore, South Korea and Taiwan, in this tail
risk scenario"
    The Singapore dollar slipped 0.2 percent, while the
Taiwan dollar weakened 0.3 percent.  
    Brent crude oil futures were 0.7 percent higher
putting pressure on major oil importing countries such as India,
Indonesia and the Philippines as rising oil prices threaten to
widen their fiscal deficits and spur inflation.
    The Indonesian rupiah weakened 0.5 percent, while the
Indian rupee slid 0.1 percent. 
    Elsewhere, the Thai baht dipped 0.4 percent and was
among the region's biggest losers.
    
     WON 
     The South Korean won slipped 0.3 percent, with
softer inflation dampening prospects for tighter monetary 
policy.
    Consumer prices in South Korea in June were 1.5 percent
higher than a year earlier, data showed on Tuesday, less than
the 1.7 percent expected in a Reuters poll.
    Benchmark inflation has held below the Bank of Korea's 2
percent target since October last year, making inflation a
hurdle to any monetary policy tightening even as interest rates
in major economies are set to rise.

    The following table shows rates for Asian currencies against
the dollar.
    CURRENCIES VS U.S. DOLLAR
 Change on the day at 0534 GMT                          
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    110.930     110.89        -0.04
 Sing dlr                     1.371       1.3690        -0.18
 Taiwan dlr                   30.624      30.523        -0.33
 Korean won                   1123.300    1120          -0.29
 Baht                         33.260      33.12         -0.42
 Peso                         53.487      53.419        -0.13
 Rupiah                       14450.000   14375         -0.52
 Rupee                        68.865      68.80         -0.10
 Ringgit                      4.047       4.038         -0.22
 Yuan                         6.704       6.6660        -0.56
                                                        
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    110.930     112.67        +1.57
 Sing dlr                     1.371       1.3373        -2.49
 Taiwan dlr                   30.624      29.848        -2.53
 Korean won                   1123.300    1070.50       -4.70
 Baht                         33.260      32.58         -2.04
 Peso                         53.487      49.977        -6.56
 Rupiah                       14450.000   13565         -6.12
 Rupee                        68.865      63.87         -7.25
 Ringgit                      4.047       4.0440        -0.07
 Yuan                         6.704       6.5069        -2.93
 
 (Reporting by Aditya Soni in Bengaluru
Editing by Jacqueline Wong)
  
 
 
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