October 14, 2019 / 6:03 AM / 3 months ago

EM ASIA FX-Asian currencies firm on signs of U.S.-China breakthrough

    * Asian units firm on trade optimism
    * Taiwan dollar, S.Korean won lead gains
    * China's yuan rise against the dollar, despite weak trade

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Oct 14 (Reuters) - Asian currencies rose on Monday after the
United States and China signalled progress in their trade
negotiations, which lifted investor sentiment and prompted a
hunt for risk assets such as emerging market pairs.
    The improved mood supported currencies of trade-reliant
economies, specifically the Taiwan dollar and the South Korean
won, which led regional gains.
    U.S. President Donald Trump on Friday outlined the first
phase of a deal to end a trade war with China and suspended a
threatened tariff hike on $250 billion in Chinese imports that
was set to take effect from Tuesday. However, he did not revoke
any of the existing tariffs on Chinese goods.
    According to Trump, the phase-1 trade deal would cover
agriculture, currency and some aspects of intellectual property
    Most Asian currencies have been severely hit since the onset
of the trade war between the world's two biggest economies last
year, as higher U.S. tariffs on Chinese goods slowed the
regional economies as a whole, with many countries playing a
major part of the supply chain to China's exports.
    "The partial deal between U.S. and China should temporarily
boost sentiment, remove some of the depreciation pressure on CNH
and provide relative support for Asia ex-Japan currencies,
including the South Korean won and Taiwan dollar," said
Saktiandi Supaat, head of FX research at Maybank in a note.
    "The actual signing of the agreement is still four to five
weeks away and past experience suggests there is still room for
    The Taiwan dollar and the South Korean won
 led the regional currencies, each rising more than
0.5% against the greenback. 
    The Taiwan dollar, in fact, touched a more than one-year
high of 30.61 to the dollar.
    China's yuan, also jumped to a two-month high
against the dollar despite its recent trade data showed slowing
exports and imports, pointing to a further weakness in the
    The Indian rupee and the Philippine peso
also gained over 0.25% each on Monday.
    The Singapore dollar gained 0.28% against the dollar
on Monday.
    The Sino-U.S. trade optimism boosted the export reliant
nation's currency, despite data showing its economy grew less
than expected in the third quarter on an annualised basis.

    However, the economy avoided slipping into a technical
recession, preliminary data showed on Monday. 
    In a statement, the Monetary Authority of Singapore (MAS)
said it would lower slightly the slope of the Singapore dollar's
policy band, while the width and centre of the band would not be
    "The rationale for easing is clear: subdued core inflation
and weaker economic growth with output below potential. Overall,
we think MAS is keeping its option open to more easing ahead,"
said MUFG Bank in a report.
    The following table shows rates for Asian currencies against
the dollar at 0533 GMT.
   Change on the day                          
    at   0533 GMT                       
  Currency             Latest  Previou     Pct
                          bid    s day    Move
  Japan yen            108.33    108.4   +0.06
  Sing dlr             1.369    1.3725   +0.27
  Taiwan dlr           30.580   30.850   +0.88
  Korean won           1183.5   1188.8   +0.45
  Peso                 51.450     51.6   +0.29
  Rupiah               14110.    14123   +0.09
  Rupee                70.868    71.02   +0.22
  Ringgit              4.178     4.184   +0.14
  Yuan                 7.055    7.0890   +0.48
    *Thai markets are                         
   closed for holiday                   
  Change so far in                            
  Currency             Latest  End         Pct
                       bid     2018       Move
  Japan yen            108.33   109.56   +1.14
  Sing dlr             1.369    1.3627   -0.45
  Taiwan dlr           30.580   30.733   +0.50
  Korean won           1183.5  1115.70   -5.73
  Baht                 30.410    32.55   +7.04
  Peso                 51.450    52.47   +1.98
  Rupiah               14110.    14375   +1.88
  Rupee                70.868    69.77   -1.55
  Ringgit              4.178    4.1300   -1.15
  Yuan                 7.055    6.8730   -2.58
 (Reporting By Patturaja Murugaboopathy; Graphic by Gaurav
Dogra; Editing by Sam Holmes)
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