October 10, 2018 / 6:58 AM / 7 months ago

REFILE-EM ASIA FX-Asian currencies find respite as U.S. yields dip

 (Corrects typo in Mizuho in 12th paragraph)
    * Dollar pause gives life to local units
    * Investors eye U.S. inflation data for signs of slowing
    * Rupee gains on back of easing oil prices 

    By Nikhil Nainan
    Oct 10 (Reuters) - A retreat in U.S. debt yields gave Asian
currencies some respite on Wednesday, but going forward they are
likely to remain under pressure due to the prospect of more rate
hikes from the U.S. Federal Reserve.
   Benchmark U.S 10-year Treasury yields came off seven-and-a
-half-year highs overnight, though investors continue to bet
that the Fed will remain on its policy tightening path, despite 
President Donald Trump criticising the central bank on Tuesday
for raising rates too fast.
    Investors are focussed on U.S. inflation data due to be
released on Thursday. A Reuters poll forecast that data would
show inflation slowed to 2.4 percent. 
    The Thai baht was Asia's best performer,
strengthening 0.5 percent to 32.860 per dollar, as analysts
reckoned Thai interest rates would soon start increasing again,
having not risen since 2011.
    The country's central bank meets on Nov.14, and its board
members were split when it opted to hold the policy rate steady
last month.
    "The prospects of the beginning of a rate normalization in
Thailand still looks pretty strong to us, given that the output
gap has likely closed," said Wei Liang Chang, FX strategist at
Mizuho Bank.
    Meanwhile, the Philippine peso was unmoved after
initially weakening following August trade data that showed a
deficit above $3 billion for a fifth month.
    The peso has lost nearly 8 percent this year.
    Taiwan financial markets were closed for a holiday.
    The yuan firmed 0.1 percent against the dollar to
    A Reuters poll forecast China's onshore yuan would pare some
of its recent losses against the dollar over the coming year, as
analysts expected risks would fade from both the U.S.-China
trade war and the emerging markets sell-off.
    Mizuho's Wei Liang believes the People's Bank of China would
take a balanced approach, not wanting to stoke capital outflows
by letting the currency weaken too much.
    Fall out from the trade war prompted the International
Monetary Fund (IMF) to lower its China's 2019 economic growth
forecast to 6.2 percent from 6.4 percent.
    A slip in oil prices helped the rupee, Asia's worst
performer this year, firm 0.4 percent to 74.098 against the
dollar, having plumbed record lows a day earlier.
    The rupee is expected to stay near record lows over the
coming year despite expectations that the Reserve Bank of India
will raise rates in December and once more in 2019. India is set
to hold a general election by May, though investors will also be
watching how Prime Minister Narendra Modi's Hindu nationalist
party fares in a series of state polls later this year.
    "The rupee will remain fairly weak over the next three to
four months," said Wei Liang Chang.
 Change on the day at 0547 GMT                          
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    112.980     112.94        -0.04
 Sing dlr                     1.380       1.3819        +0.17
 Korean won                   1132.400    1132.7        +0.03
 Baht                         32.860      33.03         +0.52
 Peso                         54.150      54.15         +0.00
 Rupiah                       15200.000   15225         +0.16
 Rupee                        74.098      74.39         +0.39
 Ringgit                      4.150       4.155         +0.12
 Yuan                         6.916       6.9260        +0.14
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    112.980     112.67        -0.27
 Sing dlr                     1.380       1.3373        -3.07
 Taiwan dlr                   30.968      29.848        -3.62
 Korean won                   1132.400    1070.50       -5.47
 Baht                         32.860      32.58         -0.85
 Peso                         54.150      49.977        -7.71
 Rupiah                       15200.000   13565         -10.76
 Rupee                        74.098      63.87         -13.80
 Ringgit                      4.150       4.0440        -2.55
 Yuan                         6.916       6.5069        -5.92
 (Reporting by Sumeet Gaikwad and Nikhil Kurian Nainan in
Bengaluru; Editing by Simon Cameron-Moore)
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