April 1, 2019 / 6:01 AM / 2 months ago

EM ASIA FX-Asian currencies firmer as China's factory activity rebounds

    * Yuan gains support regional currencies
    * Thai March inflation at lower end of c.bank target range
    * Indonesian inflation slows below c.bank target range

 (Adds text, updates prices)
    By Nikhil Nainan
    April 1 (Reuters) - Most Asian currencies gained on Monday
as a surprise improvement in China's factory activity boosted
confidence in regional assets, reversing more pressing concerns
about the impact of a broader economic slowdown.
    Factory activity in China unexpectedly grew for the first
time in four months in March, a sign government stimulus may be
starting to take hold in the world's second largest economy.

    "While a single data point is insufficient to declare that
the worst is behind us, we should see more signs of
stabilisation as Chinese stimuli takes hold," DBS said in a
note.
    The encouraging data supported a 0.1 percent gain in China's
yuan to 6.706 a dollar, which in turn supported
currencies that tend to track the Chinese unit. 
    The Philippine peso was the top gainer on the day,
rising 0.3 percent against the greenback to 52.510. The
Singapore dollar and South Korean won
strengthened 0.2 percent and 0.3 percent, respectively.
    As investor confidence returned, the allure of the dollar's
safe-haven appeal waned against a basket of its key rivals
, falling 0.1 percent. 
    The Thai baht edged higher. Headline consumer
prices rose 1.24 percent year-on-year in March, topping
forecasts in a Reuters poll but remaining at the lower end of
the central bank's 1-4 percent target range.
    Elsewhere, annual inflation in Indonesia slowed a little
more than expected in March, slipping below the central bank's
target range for the first time in three years.
    The rupiah also edged higher, up 0.1 percent to
14,225 per dollar.
    Currency and bond markets in India were closed for annual
account closing of banks. 
    
    CHINA CHEER
    If sustained, the improvement in business conditions in
China could indicate that manufacturing is on a path to
recovery, easing fears that China could slip into a sharper
economic downturn.
    "We expect more signs of activity recovery in the coming
months, as fiscal easing kicks in," wrote Julia Wang, a greater
China economist at HSBC.  
    "Its recovery also suggests that some export businesses,
which have been fearing the worst, are seeing businesses
normalising to some degree," she added, but cautioned that the
external environment will remain challenging this year. 
    Other analysts also cited the need to quell exuberance and
view the upbeat data cautiously. 
    "As any good statistician (and economist) will warn, one
data point does not confirm a trend; and so it is too early to
be positive, even if optimists get hopeful," Mizuho Bank said in
a note.  
    
 CURRENCIES VS U.S. DOLLAR
 Change on the day at   0512 GMT                  
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              111.010     110.84        -0.15
 Sing dlr               1.353       1.3556        +0.17
 Taiwan dlr             30.793      30.825        +0.10
 Korean won             1132.300    1135.1        +0.25
 Baht                   31.700      31.72         +0.06
 Peso                   52.510      52.67         +0.30
 Rupiah                 14225.000   14235         +0.07
 Ringgit                4.076       4.08          +0.11
 Yuan                   6.706       6.7124        +0.10
                                                  
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              111.010     109.56        -1.31
 Sing dlr               1.353       1.3627        +0.69
 Taiwan dlr             30.793      30.733        -0.19
 Korean won             1132.300    1115.70       -1.47
 Baht                   31.700      32.55         +2.68
 Peso                   52.510      52.47         -0.08
 Rupiah                 14225.000   14375         +1.05
 Ringgit                4.076       4.1300        +1.34
 Yuan                   6.706       6.8730        +2.49
 
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Sam
Holmes)
  
 
 
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