EM ASIA FX-Most weaken, tech gloom hits Korean won, Taiwan dollar

Credit: REUTERS/THOMAS WHITE

Most Asian currencies were weaker on Thursday, with a deteriorating outlook for the global memory chip industry hurting the South Korean won and Taiwan dollar.

By Ambar Warrick

June 13 (Reuters) - Most Asian currencies were weaker on Thursday, with a deteriorating outlook for the global memory chip industry hurting the South Korean won and Taiwan dollar.

Regional risk appetite waned as chances of a U.S.-China trade deal being struck at the G20 leaders' meeting in Osaka in late-June grew less likely.

Emerging market currencies made little headway against the dollar on Thursday despite moderate U.S. inflation data that enhanced rate cut expectations by the Federal Reserve. The dollar .DXY held the bulk of its overnight gains on safe-haven demand. USD/

The Japanese yen JPY= was also up about 0.12%.

U.S. President Donald Trump declined to set a deadline on Wednesday for levying further tariffs on Chinese goods and called the relationship with Beijing good but "testy" after China walked back commitments for a trade deal.

"Risk appetite remains soft amid concerns on global growth and a protracted trade war on the back of tough rhetoric from Trump towards the U.S.' trading partners," Mizuho Bank's Zhu Huani said in a note.

The won KRW=KFTC declined 0.24% to the dollar, while the Taiwan dollar TWD=TP shed about 0.22%. Chipmaker stocks across both regions declined after a report published by Evercore ISI on U.S. chip equipment maker Lam Research LRCX.O spelt further weakness in the industry.

The Indonesian rupiah IDR=ID led intraday losses, falling about 0.28% to the dollar. While sentiment for the rupiah has improved recently due to political stability in the archipelago, the currency stands to weaken if changes in global trade flows adversely affect Indonesia's current account balance.

"Coupled with continued concerns on trade and current account outlook, (the) rupiah could find it harder to gain ground, despite dissipated political uncertainty and rising consumer confidence," Saktiandi Supaat, head of FX research at Maybank Singapore, said in a note.

The Chinese yuan CNY=CFXS edged about 0.02% lower to the dollar, with further losses being mitigated by a stronger than expected midpoint. The currency has seen stronger daily fixes of late as it nears the crucial 7 per dollar level.

WEAKEST REGIONAL CURRENCIES

The won is the worst regional performer this year, dropping about 5.9%, while the Taiwan dollar is the second-worst, having shed about 2.4%.

Taiwan and South Korea rely heavily on electronics exports, and a recent slowdown in the global technology industry has dampened business conditions in both economies.

Taiwan cut its 2019 GDP outlook last month due to a drop in exports, while South Korea revised lower its first-quarter GDP figures last week.

Sustained weakness in both economies will likely prompt future policy easing.

The following table shows rates for Asian currencies against the dollar on Thursday.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0450 GMT

Currency

Latest bid

Previous day

Pct Move

Japan yen

108.360

108.49

+0.12

Sing dlr

1.366

1.3666

+0.03

Taiwan dlr

31.500

31.430

-0.22

Korean won

1185.400

1182.6

-0.24

Baht

31.210

31.24

+0.10

Peso

51.950

51.99

+0.08

Rupiah

14270.000

14230

-0.28

Rupee

69.350

69.34

-0.01

Ringgit

4.160

4.155

-0.12

Yuan

6.921

6.9188

-0.02

Change so far in 2019

Currency

Latest bid

End 2018

Pct Move

Japan yen

108.360

109.56

+1.11

Sing dlr

1.366

1.3627

-0.26

Taiwan dlr

31.500

30.733

-2.43

Korean won

1185.400

1115.70

-5.88

Baht

31.210

32.55

+4.29

Peso

51.950

52.47

+1.00

Rupiah

14270.000

14375

+0.74

Rupee

69.350

69.77

+0.61

Ringgit

4.160

4.1300

-0.72

Yuan

6.921

6.8730

-0.69

(Reporting by Ambar Warrick in Bengaluru Editing by Jacqueline Wong)

((Ambar.Warrick@thomsonreuters.com; +91-80-6749-6625; Reuters Messaging: ambar.warrick.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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