October 10, 2017 / 6:14 AM / 8 months ago

EM ASIA FX-Upbeat yuan supports Asia FX, Korean won robust after holiday break

    By Hanna Paul
    Oct 10 (Reuters) - Most Asian currencies turned firmer on
Tuesday with the Korean won coming back well-refreshed from a
week's holiday and China's   resurgent yuan bolstering its
regional peers.
    The Korean won rose to levels unseen in about two
weeks in its first day of trade in the month, while Seoul's
Kospi Index was on a tear, attracting large flows into
the currency.
    Geopolitical tensions resurfaced over rumours that North
Korea may be planning a provocative missile test but
countervailing views that further escalation was unlikely added
appeal to the currency. 
    "When they start threatening to fire off rockets at each
other, we know its really not going to come into fruition. But  
investors are gradually sidestepping that risk aversion that
came to the market," said Stephen Innes, senior trader at FX
broker OANDA.
    The regional currencies were buoyed up by China's yuan
 heading for its best day in more than a month. 
    The currency gained over half a percent against the
greenback as the central bank set stronger-than-expected
official guidance, suggesting authorities are stabilising the
currency before the all-important national leadership congress
next week.
     "The strength in Asia ex-Japan currencies is driven by the
stronger yuan as the People's Bank of China fixed a firmer
Chinese yuan," said Christopher Wong, senior FX strategist for
Maybank in Singapore.
    The Thai baht edged up for the fourth session out
of five and the Malaysian ringgit rose marginally.
    "Investors are looking at the fact that the Thai baht and
the Malaysian ringgit are underpositioned right now after the
recent sell-off and they are providing opportunities to pick
up," said Oanda's Innes.
    He noted, however, that there was some uncertainty around
the Indonesian rupiah and the Indian rupee,
owing to jitters over U.S. Federal Reserve's monetary policy and
balance sheet reduction plans. 
    Expectations for the Fed to raise rates later this year have
heightened on the back of improved prospects for the U.S.
    The dollar's index against a basket of six rivals
edged lower.
    Bucking the regional trend, the Philippine peso
inched lower after news that the Philippines' trade deficit
widened in August from July.
    Taiwan was closed for a national holiday.   
    The Korean won reopened after a week-long
holiday, headed for its best day in over six weeks.
    Market participants expected that Pyongyang might make a
dramatic gesture to mark the anniversary of the founding of
North Korea's Communist Workers party, but a contrasting view
that the situation would not escalate lifted the currency.
    "Geopolitical tensions may have subsided but it still
warrants caution as the risk remains," Maybank's Wong said.
    The following table shows rates for Asian currencies against
the dollar at 0515 GMT.

 Change on the day at 0515 GMT                           
  Currency                        Latest  Previous    Pct
                                     bid       day   Move
  Japan yen                      112.630    112.66  +0.03
  Sing dlr                       1.359      1.3634  +0.32
  Korean won                     1138.00    1145.4  +0.65
  Baht                           33.323      33.38  +0.17
  Peso                           51.310     51.245  -0.13
  Rupiah                         13498.0     13515  +0.13
  Rupee                          65.240      65.35  +0.17
  Ringgit                        4.222        4.23  +0.19
  Yuan                           6.598      6.6248  +0.41
  Change so far in 2017                                  
  Currency                       Latest   End 2016    Pct
                                 bid                 Move
  Japan yen                      112.630    117.07  +3.94
  Sing dlr                       1.359      1.4490  +6.62
  Korean won                     1138.00   1207.70  +6.12
  Baht                           33.323      35.80  +7.43
  Peso                           51.310      49.72  -3.10
  Rupiah                         13498.0     13470  -0.21
  Rupee                          65.240      67.92  +4.11
  Ringgit                        4.222      4.4845  +6.22
  Yuan                           6.598      6.9467  +5.29
 (Reporting by Hanna Paul; Editing by Eric Meijer)
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