April 18, 2017 / 6:42 AM / 3 months ago

EM ASIA FX-Emerging Asian FX slips as worry over North Korea remains

5 Min Read

    By Aparajita Saxena
    April 18 (Reuters) - Asian currencies were weaker on Tuesday
as investors reduced their positions in emerging markets,
unwilling to take risks until tensions over North Korea
significantly subside.
    There was some suggestion that the risk-off sentiment
following North Korea's failed missile launch on Sunday, which
raised concerns that the isolated state may soon test another
nuclear bomb or missile, was changing. 
    Safe-haven gold prices, which rose after the launch, fell
from five-month highs and the safe-haven yen declined 0.17
percent versus the U.S. dollar.
    But the hard-line that President Donald Trump has taken over
the North Korea "problem" in the recent weeks, was further
underscored by Vice President Mike Pence's warning on Monday
that recent American military strikes in Syria and Afghanistan
showed that the U.S. leader's resolve should not be questioned.
    North Korea remained defiant and said that Pyongyang's next
nuclear test would take place "at a time and at a place where
our headquarters deems necessary".
    In a note on Tuesday, Mizuho Bank said "Fact is, the North
Korea 'problem' is long way off a resolution. Crucially, the
potential for more launches ahead of this weekend warrants
watching as much as precaution'" 
    Asian currencies fell as the U.S. dollar pulled away
from five-month lows against the yen it hit on Monday.
    Dollar upticks in U.S. trading were underpinned by comments
from U.S. Treasury Secretary Steven Mnuchin who told the
Financial Times he agreed with Trump's view that the dollar's
strength in the short term was hurting exports, but strength
over the long term was a positive.
    The Philippine peso slipped for a second day
versus the dollar after February overseas workers remittances
rose 3.4 percent from a year earlier. Scotiabank said the market
had expected a 5.8 percent gain for remittances, which help
power domestic consumption.
    The Indonesian rupiah fell to its lowest in nearly a
week, ahead of Wednesday's election of the Jakarta governor.
    Indonesian markets will be closed on Wednesday for the
voting. 
        
    THAI BAHT
    The baht fell 0.37 percent to 34.378, its lowest in
nearly 21 months versus the dollar, on Tuesday.
    However, ANZ Research said it expects the baht to resume its
uptrend soon, underpinned by a large current account surplus,
which is when exports of a country exceed its imports.
    The note added that even though the U.S. Treasury's
semi-annual report to Congress did not include Thailand on its
monitoring list, it does not mean the focus is off its foreign
exchange intervention activities.
    "Thailand has the 11th largest bilateral trade deficit with
the US in 2016. This could result in reduced FX intervention
activity by the Bank of Thailand to ensure they remain under the
US Treasury's radar," the note said, making the case for further
strengthening in the baht.
    
    KOREAN WON
    The South Korean won erased modest early morning
gains and was  0.27 percent lower against the U.S. dollar.
    "Geopolitical concerns will likely increase the volatility
in capital flows and the fluctuations in the Korean-won assets,"
DBS Group said in a note, adding that concerns about North Korea
may also weigh on South Korea's tourism industry.
    Local political concerns from the coming South Korean
presidential election may also affect the won, the note said,
adding frontrunner Moon Jae-in is perceived to favour a
relatively soft line towards Pyongyang.
    
 CURRENCIES VS U.S. DOLLAR; Change at 0512 GMT
  Currency         Latest bid  Previous day   Pct Move
  Japan yen       109.060            108.89      -0.16
  Sing dlr        1.399              1.3979      -0.09
  Taiwan dlr      30.397             30.350      -0.15
  Korean won      1140.800           1137.7      -0.27
  Baht            34.378              34.25      -0.37
  Peso            49.625              49.54      -0.17
  Rupiah          13297.000           13283      -0.11
  Rupee           64.560              64.51      -0.08
  Ringgit         4.408               4.403      -0.11
  Yuan            6.889              6.8835      -0.09
                                                      
  Change so far                                       
  Currency        Latest bid   End 2016       Pct Move
  Japan yen       109.060            117.07      +7.34
  Sing dlr        1.399              1.4490      +3.56
  Taiwan dlr      30.397             32.279      +6.19
  Korean won      1140.800          1207.70      +5.86
  Baht            34.378              35.80      +4.14
  Peso            49.625              49.72      +0.19
  Rupiah          13297.000           13470      +1.30
  Rupee           64.560              67.92      +5.20
  Ringgit         4.408              4.4845      +1.74
  Yuan            6.889              6.9467      +0.83
 
 (Reporting by Aparajita Saxena in Bengaluru; Editing by Richard
Borsuk)
  
 
 

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