March 27, 2019 / 6:09 AM / 5 months ago

EM ASIA FX-Asian FX weakens as dollar edges up on stable bond yields

    * Baht lower as election uncertainty continues
    * Rupee has gained 2.6 pct so far this month
    * Peso on track for its worst month since June 2018

 (Adds text, updates prices)
    By Nikhil Nainan
    March 27 (Reuters) - Most emerging Asian currencies weakened
on Wednesday with the dollar edging up as U.S. Treasury yields,
the subject of much attention and concern, stabilised.
    The dollar index, a basket of six major currencies versus
the greenback, was 0.2 percent higher at 96.899, adding to
modest gains overnight.
    The 10-year U.S. Treasuries yield inched up to
as high as 2.432 percent from Monday's 15-month low, though the
yield curve remained inverted, keeping investors on edge as this
phenomenon has preceded every U.S. recession over the past 50
    The Thai baht dropped 0.3 percent against the
dollar to 31.740, as uncertainty from Sunday's disputed election
weighs on investors. 
    In the latest development, the Pheu Thai party, which the
military junta overthrew in 2014, said it has formed a
"democratic front" with other parties to try and form the
government. However, it would likely fall short of electing a
prime minister.
    For many traders, the focus will now partially shift to
Thursday's resumption of U.S.-China trade talks in Beijing. 
    Previous talks have raised hopes of a breakthrough as both
sides seem intent on reaching a deal. But U.S. President Donald
Trump has warned that he may leave tariffs on Chinese goods to
ensure a deal is reached.
    "That Trump has now ruled out the 'carrot approach', (i.e.
saying that tariffs will not be rolled back before compliance is
verified), means that some degree of uncertainty will remain on
the table," Mizuho Bank said in a note on Wednesday. 
    Indonesia's rupiah weakened 0.3 percent to 14,210,
and like some of its peers, is on track for a monthly loss
following a strong start to the year.
    The Philippine peso was a shade stronger on
Wednesday, but is headed for its worst month since June, likely
ending two straight months of gains against the dollar.
    Declines in U.S. Treasury yields, stemming from the Federal
Reserve's dovish shift, "reflect moderating growth expectations
in the developed markets," DBS wrote in a note. "Portfolio
investors have returned to the regional high-yielding debt
markets, including (Indian rupee) bonds."
    The Indian rupee, which was basically flat on
Wednesday, has surged about 2.6 percent against the dollar this
   Indian 10-year benchmark yields, on the decline
all month, sharply fell on Tuesday and at 0552 GMT Wednesday
were at 7.341 percent.  
 Change on the day at 0508 GMT                    
 Currency               Latest bid  Previous day  Pct Move
 Japan yen              110.590     110.62        +0.03
 Sing dlr               1.354       1.3522        -0.10
 Taiwan dlr             30.855      30.835        -0.06
 Korean won             1134.600    1133.4        -0.11
 Baht                   31.740      31.65         -0.28
 Peso                   52.590      52.62         +0.06
 Rupiah                 14210.000   14165         -0.32
 Rupee                  68.880      68.86         -0.03
 Ringgit                4.075       4.07          -0.12
 Yuan                   6.715       6.7150        0.00
 Change so far in 2019                            
 Currency               Latest bid  End 2018      Pct Move
 Japan yen              110.590     109.56        -0.93
 Sing dlr               1.354       1.3627        +0.68
 Taiwan dlr             30.855      30.733        -0.40
 Korean won             1134.600    1115.70       -1.67
 Baht                   31.740      32.55         +2.55
 Peso                   52.590      52.47         -0.23
 Rupiah                 14210.000   14375         +1.16
 Rupee                  68.880      69.77         +1.29
 Ringgit                4.075       4.1300        +1.35
 Yuan                   6.715       6.8730        +2.35
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by
Richard Borsuk)
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