EM ASIA FX-Most Asian currencies firm on dollar weakness, trade hopes

Credit: REUTERS/WILLY KURNIAWAN

Most Asian currencies strengthened on Thursday due to overnight weakness in dollar after a fall in U.S. retail sales, while lingering hopes of a Sino-U.S. trade deal also lent support to the export-reliant regional units.

By Patturaja Murugaboopathy

Oct 17 (Reuters) - Most Asian currencies strengthened on Thursday due to overnight weakness in dollar after a fall in U.S. retail sales, while lingering hopes of a Sino-U.S. trade deal also lent support to the export-reliant regional units.

The Taiwanese dollar TWD=TP led the gains in the region, followed by the South Korean won KRW=KFTC and the Malaysian ringgit MYR=.

"We still see some net risk-on sentiment supporting the Asian currencies in general. We have positive news coming out from Brexit. And in Asia, regarding the Sino-U.S. trade situation, it is still very much on the holding pattern," said Terence Wu, a currency strategist at OCBC Bank.

"Even though people are starting to reach some suspicions over whether a deal will be signed eventually in the APAC meeting, at this point there are no clear signals that it is breaking up."

The dollar index .DXY was trading flat at 98.005, hovering near a four-week low of 97.898 it touched in the previous session.

Analysts said regional currencies also firmed on rising expectations on an interest rate cut by the U.S. Federal Reserve this month. The bets further strengthened after data released on Wednesday showed U.S. retail sales falling for the first time seven months in September.

Indian rupee INR=IN and the Indonesian rupiah IDR=ID,the two high yielding currencies, also strengthened on the day due to a sharp fall in U.S. bond yields.

On the other hand, China's yuan CNY=CFXS edged lower against the U.S. dollar after the central bank set a weaker daily reference rate for the currency.

INDIAN RUPEE

The Indian rupee INR=IN rose 0.16% against the dollar on Thursday helped by weaker oil prices, lower U.S. bond yields and strong domestic equities.

However, some analysts said falling real yields of Indian bonds could affect the rupee, along with other concerns such as fiscal deficit and lower liquidity in the banking system.

India's real yields have fallen nearly 200 basis points since the start of this year, according to Refinitiv data. Real yields are nominal yields adjusted for inflation.

"Rupee could suffer the double whammy of growth dent as well as pressures from capital pulling out of equities in response to downbeat growth prospects," said Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore in a note.

The following table shows rates for Asian currencies against the dollar at 0513 GMT.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0513 GMT

Currency

Latest bid

Previous day

Pct Move

Japan yen

108.750

108.75

+0.00

Sing dlr

1.369

1.3700

+0.11

Taiwan dlr

30.664

30.722

+0.19

Korean won

1186.400

1187.8

+0.12

Baht

30.365

30.39

+0.08

Peso

51.420

51.51

+0.18

Rupiah

14160.000

14164

+0.03

Rupee

71.400

71.44

+0.05

Ringgit

4.186

4.1935

+0.18

Yuan

7.098

7.0950

-0.04

Change so far in 2019

Currency

Latest bid

End 2018

Pct Move

Japan yen

108.750

109.56

+0.74

Sing dlr

1.369

1.3627

-0.42

Taiwan dlr

30.664

30.733

+0.23

Korean won

1186.400

1115.70

-5.96

Baht

30.365

32.55

+7.20

Peso

51.420

52.47

+2.04

Rupiah

14160.000

14375

+1.52

Rupee

71.400

69.77

-2.28

Ringgit

4.186

4.1300

-1.34

Yuan

7.098

6.8730

-3.17

India real yieldshttps://tmsnrt.rs/31kNwa2

(Reporting By Patturaja Murugaboopathy; Editing by Rashmi Aich)

((patturaja.muruga@thomsonreuters.com ; +91-80-6749-6540; Reuters Messaging: patturaja.muruga.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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