June 12, 2017 / 6:33 AM / a month ago

EM ASIA FX- Most Asian currencies subdued ahead of Fed rate decision

5 Min Read

 (Adds details, updates prices)
    By Susan Mathew
    June 12 (Reuters) - Most Asian currencies traded in tight
ranges on Monday, tracking  movements in the U.S. dollar ahead
of the Federal Reserves' policy meeting this week, where it is
widely expected to raise interest rates.
    A Reuters poll showed that while markets have priced in a
25-basis point rise in rates, investors' will be looking for any
fresh hints on the pace of further tightening and for details on
its plans for trimming its balance sheet. Mixed U.S. economic
data and lower inflation expectations have created a division of
opinion.
    "The market will be more focused on the dot plot and whether
or not it will show a more gradual rate hike trajectory, and if
that's the case, then it will be more positive for Asian
currencies appetite post Fed," said Chang Wei Liang, FX
strategist at Mizuho Bank.
    Markets will also be looking out for any guidance on the
vanishing normalisation policy from the FOMC meeting, Chang
added, saying that at the moment, the Asian currency markets are
in a wait-and-see mode.
    The Fed concludes its two-day meeting on Wednesday, and the
outcome will affect trade in early Asia on Thursday. 
    The dollar had risen against a basket of currencies
on Friday, helped by a sharp drop in the British pound after
surprise results of the UK parliamentary elections. On Monday,
though, sterling gained, buoyed by Prime Minister Theresa May's
efforts to unite her party.
    Among regional currencies, the South Korean won
was 0.2 percent lower, after South Korea's central bank chief
said on Monday that the bank will maintain its current
record-low interest rate of 1.25 percent as uncertainties remain
high and as inflationary pressure is weak.
    Meanwhile, the Taiwan dollar was on track to post
its fifth straight session of losses on Monday, down 0.1
percent. 
    The Taiwan economy, which is dependent on tech exports to
the United States, took a beating with the local semiconductor
index falling 1.8 percent, as U.S. tech stocks tumbled
on Friday.
    But analysts say it doesn't reflect any fundamental shift in
terms of demand for tech products and, therefore, any spillover
on Asian currencies isn't going to be large and will probably be
transitory.
    Philippine and Malaysia markets were closed for local
holidays.

    INDIAN RUPEE
    The Indian rupee was 0.1 percent lower ahead of
consumer price inflation (CPI) data for May, scheduled for later
in the day.
    Inflation in India is expected to have cooled to a record
low in May, a Reuters poll showed, which could add pressure on
the Reserve Bank of India to cut interest rates later in the
year.
    Mizuho Bank said in a note that weak May CPI data could set
off rupee strength amid buying in bonds driven by bets on
imminent easing.
   
    SINGAPORE DOLLAR
    The Singapore dollar was up 0.1 percent, but was
not seen to be affected by data showing retail sales growth at
9-month highs.
    Singapore's retail sales in April rose 2.6 percent from a
year earlier, data from the Singapore Department of Statistics,
showed on Monday, its best growth since July 2016. 
    Analysts said the data would not likely have any
implications on the central bank's policy stance. In April, the
Monetary Authority of Singapore warned of "significant policy
uncertainty" globally, signalling a reluctance to tighten
anytime soon. 
    
CURRENCIES VS U.S. DOLLAR 
    
  Change on the day at                                       
         0526 GMT                                    
  Currency                    Latest bid   Previous  Pct Move
                                                day  
  Japan yen                110.270           110.33     +0.05
  Sing dlr                 1.383             1.3842     +0.07
  Taiwan dlr               30.137            30.108     -0.10
  Korean won               1125.700          1123.2     -0.22
  Baht                     34.048             34.05     +0.01
  Rupiah                   13290.000          13290     +0.00
  Rupee                    64.320             64.24     -0.12
  Yuan                     6.797             6.7970     -0.00
                                                             
  Change so far                                              
  Currency                 Latest bid     End 2016   Pct Move
  Japan yen                110.270           117.07     +6.17
  Sing dlr                 1.383             1.4490     +4.75
  Taiwan dlr               30.137            32.279     +7.11
  Korean won               1125.700         1207.70     +7.28
  Baht                     34.048             35.80     +5.15
  Rupiah                   13290.000          13470     +1.35
  Rupee                    64.320             67.92     +5.60
  Yuan                     6.797             6.9467     +2.20
 
    

    
 (Reporting by Susan Mathew in Bengaluru; Editing by Jacqueline
Wong)
  
 
 

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