Edition:
United Kingdom

Patturaja Murugaboopathy

EM ASIA FX-Asian currencies edge up as markets reassess trade war disruptions

21 Sep 2018

(Adds analyst comments, price moves and graphic) By Patturaja Murugaboopathy Sept 21 Asian currencies strengthened for the third consecutive day on Friday, supported by a weaker dollar and shifting views over how much damage the Sino-U.S. trade war will inflict on global demand and export-reliant regional economies. On Tuesday, Washington imposed 10 percent tariffs on about $200 billion worth of Chinese imports, while Beijing announced new retaliatory levies on about $60 billion worth of U.S. goods. However, the initial tariff rates imposed by both sides were lower than expected, with the United States delaying stiffer duties for another few months, reducing the risk of a sudden, sharp blow to the global economy from the escalation. The dollar index has fallen more than 1 percent this week. Analysts said investment flows are being diverted away from the greenback to its peers such as emerging market currencies as trade tensions have ebbed. "A significant factor in adding to the current run of dollar weakness is the drop on safe-haven appeal after China suggested they won't weaponise yuan in a trade war," said Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore. "Regional risk is very steady supported by thriving global equity markets, a slightly weaker dollar and a positive glean that North Korea's leader Kim Jung-un has asked for a second summit with President Trump." Analysts said the reports that China will further reduce import tariffs for the majority of its trading partners as soon as next month also supported risk sentiment in the region. "ASEAN nations may benefit from an expansion of trade with China as trade barriers are reduced, with China possibly reweighting the importance of the region due to the trade war," said Chang Wei Liang, FX strategist at Mizuho Bank. The Indian rupee and the Indonesian rupiah drew comfort from their governments' proposed measures to shore up their currencies this week. India is considering asking the central bank to offer dollars directly to oil marketing companies and is likely to announce curbs on imports of "non-essential" items to stem the rupee. On Thursday, Indonesia's finance minister said the government is aiming to persuade exports to keep their earnings onshore and convert them into local currency. The Indian rupee climbed 0.75 percent on the day leading the regional currencies gains, followed by the South Korean won, which rose nearly 0.4 percent. China's yuan firmed after the Chinese central bank said it would issue bills in Hong Kong to allow it better manage offshore yuan liquidity. The Hong Kong dollar advanced about 0.2 percent against the dollar in early Friday trade, hitting its highest levels since late February. Data from regional central banks showed their foreign exchange reserves have fallen in the past three months, reflecting their efforts to prevent declines in their currencies. Regional currencies have fallen sharply on concerns over Sino-U.S. trade war and fears of contagion from Turkey and other volatile emerging markets in the last few months. "Further declines in most AXJ foreign reserves are likely especially as currency defence may take on added significance ahead of critical general/presidential elections in Thailand, Indonesia and India next year," said MUFG Bank in a report. A recent Reuters poll showed that bearish bets on Asian currencies have risen over the last two weeks. The following table shows rates for Asian currencies against the dollar at 0522 GMT. CURRENCIES VS U.S. DOLLAR Change as of 0522 GMT Currency Latest Previous Pct bid day Move Japan yen 112.760 112.48 -0.25 Sing dlr 1.364 1.3644 +0.06 Taiwan dlr 30.734 30.795 +0.20 Korean won 1116.80 1120.4 +0.32 0 Baht 32.380 32.38 +0.00 Peso 54.020 54.075 +0.10 Rupiah 14825.0 14840 +0.10 00 Rupee 71.870 72.37 +0.70 Ringgit 4.128 4.135 +0.17 Yuan 6.841 6.8460 +0.07 Change so far in 2018 Currency Latest End 2017 Pct bid Move Japan yen 112.760 112.67 -0.08 Sing dlr 1.364 1.3373 -1.93 Taiwan dlr 30.734 29.848 -2.88 Korean won 1116.80 1070.50 -4.15 0 Baht 32.380 32.58 +0.62 Peso 54.020 49.93 -7.57 Rupiah 14825.0 13565 -8.50 00 Rupee 71.870 63.87 -11.1 3 Ringgit 4.128 4.0440 -2.03 Yuan 6.841 6.5069 -4.89 (Reporting by Patturaja Murugaboopathy in Bengaluru; Additional Reporting by Gaurav Dogra; Editing by Kim Coghill)

Asian currencies firm as investors look past trade concerns

20 Sep 2018

Asian currencies strengthened on Thursday, supported by a broader swing higher in risk sentiment as investors appeared to brush aside concerns about the impact of the Sino-U.S. trade war on emerging markets.

EM ASIA FX-Asian units fall on US tariffs, recover on hopes tensions can ease

18 Sep 2018

(Adds analyst comments, price moves and graphic) By Patturaja Murugaboopathy Sept 18 Most emerging Asian currencies fell early on Tuesday on news the United States was imposing more tariffs on imports from China, but some recovered as Beijing did not quickly announce retaliatory moves. U.S. President Donald Trump said on Monday that he will impose 10 percent U.S. tariffs on about $200 billion worth of Chinese imports and warned he would pursue more tariffs if China retaliates. Up until now, the United States and China have applied tariffs to $50 billion of each other's goods. As of 0600 GMT Tuesday, the Chinese government had not issued a statement on the U.S. move. But on Tuesday morning, China released comments by Commerce Minister Zhong Shan on Monday to foreign investors that "there was no winner in a trade war and that cooperation was the only correct choice". The comments provided some lift to China's yuan and other regional currencies. The yuan, which fell as much as 0.35 percent early on Tuesday, trimmed its losses to just 0.1 percent. Traders said the renewed Sino-U.S. trade tension piled pressure on the yuan, but market participants refrained from aggressively testing lows for fear the authorities may quickly step in. The minister's remarks are "supporting Asian currencies' sentiment on hopes that negotiations can proceed from here," said Chang Wei Liang, FX strategist at Mizuho Bank. The Thai baht, Singapore dollar and the South Korean won gained on the day, taking cues from the rebound in the yuan. Thailand, Singapore and South Korea form a major part of China's supply chain and their currencies are the most affected if trade tensions escalate between the United States and China. The Indonesian rupiah led the regional decliners on the day, shedding more than 0.3 percent. Saktiandi Supaat, head of FX research at Maybank, said the central bank intervention in the rupiah and bond markets and "increasing speculation that BI (Bank Indonesia) could act again by hiking its policy rate through an out-of-cycle meeting" should help the currency. A Bank Indonesia deputy governor said on Tuesday the central bank will intervene in the market in a "measured manner" to maintain rupiah stability. With a fall of 9.1 percent, the rupiah is the second biggest loser in Asia this year, after the Indian rupee Declines in the crude oil prices propped up the Indian rupee. India is a major oil importer and lesser oil prices tend to reduce the external deficits, strengthening the rupee. "Focus is less on the EM stress points and shifted towards the trade war so the rupee is likely to be less hurt vs. other regional FX," said Maybank's Supaat. The following table shows rates for Asian currencies against the dollar at 0540 GMT. CURRENCIES VS U.S. DOLLAR Change as of 0540 GMT Currency Latest Previous Pct bid day Move Japan yen 111.950 111.83 -0.11 Sing dlr 1.371 1.3717 +0.05 Taiwan dlr 30.807 30.805 -0.01 Korean won 1125.90 1126.6 +0.06 0 Baht 32.580 32.63 +0.15 Peso 54.140 54.11 -0.06 Rupiah 14925.0 14870 -0.37 00 Rupee 72.465 72.51 +0.06 Ringgit 4.144 4.137 -0.17 Yuan 6.864 6.8553 -0.12 Change so far in 2018 Currency Latest End 2017 Pct bid Move Japan yen 111.950 112.67 +0.64 Sing dlr 1.371 1.3373 -2.46 Taiwan dlr 30.807 29.848 -3.11 Korean won 1125.90 1070.50 -4.92 0 Baht 32.580 32.58 +0.00 Peso 54.140 49.93 -7.78 Rupiah 14925.0 13565 -9.11 00 Rupee 72.465 63.87 -11.8 6 Ringgit 4.144 4.0440 -2.41 Yuan 6.864 6.5069 -5.20 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by Richard Borsuk)

EM ASIA FX-Asian currencies fall on fear of wider U.S-China trade war

17 Sep 2018

(Adds comments, details on rupee and rupiah, updates numbers) By Patturaja Murugaboopathy Sept 17 Most Asian currencies dropped significantly on Monday on worries that the U.S-China trade dispute could escalate, deepening fears of a global trade war. The two emerging Asian currencies most under pressure - the Indonesian rupiah and the Indian rupee - both fall sharply, partly because of worries on the global picture and because of domestic factors. U.S. President Donald Trump is likely to announce tariffs on about $200 billion on Chinese imports as early as Monday, a senior administration official told Reuters on Saturday. Other media reports say U.S. action would prompt immediate retaliation from China, which might cancel plans to send senior officials to Washington for trade talks soon. Last week, Asian currencies were propped up by prospects of renewed talks between the world's two biggest economies. But implementation of fresh tariffs by Trump administration could prompt investors to discard regional assets and seek refuge in the dollar. Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore, said another round of tit-for-tat tariffs between the US and China would "sour the stage for high-level US-China trade talks", in turn unnecessarily raising the bar for an agreement between the two giants. The biggest loser early on Monday was the Indian rupee, down 1.1 percent, followed by the South Korean won, off 1.07 percent. With a fall of nearly 12 percent, the Indian rupee is Asia's worst performing currency against the dollar this year. On Friday, the Indian government announced steps on Friday to stem its decline. India's finance minister said the government plans to cut down "non-necessary" imports, ease overseas borrowing norms for the manufacturing sector and relax rules around banks raising rupee-denominated overseas bonds. However, analysts doubt the government's steps will stem rupee's declines. "The rupee is unlikely to get much support from measures to support the rupee," MUFG Bank said on Monday, saying the steps are "deemed to be insufficient" to stop the declines. "In an environment of rising interest rates, corporates may refrain from obtaining more overseas loans, and in a risk-off environment when foreign investors are net sellers of both Indian equities and bonds, raising the FPI (foreign portfolio investment) limits is unlikely to yield more capital inflows," it said. The Indonesian rupiah was down more than 0.5 percent for the day after the government posted a bigger-than-expected trade deficit for August. Southeast Asia's largest economy had a trade deficit of $1.02 billion, much larger than the $680 million expected in a Reuters poll. The rupiah has fallen nearly 9 percent this year and is the region's second worst-performing currency. To help the rupiah, the Indonesian central bank has raised interest rates four times since mid-May, and many analysts expect another hike this month. The following table shows rates for Asian currencies against the dollar at 0508 GMT. CURRENCIES VS U.S. DOLLAR Change as of 0508 GMT Currency Latest bid Previous day Pct Move Japan yen 111.990 112.04 +0.04 Sing dlr 1.375 1.3740 -0.09 Taiwan dlr 30.796 30.760 -0.12 Korean won 1128.000 1116.6 -1.01 Baht 32.660 32.54 -0.37 Peso 54.090 53.97 -0.22 Rupiah 14885.000 14800 -0.57 Rupee 72.635 71.85 -1.09 Yuan 6.870 6.8680 -0.03 *Malaysian markets are closed for holiday Change so far in 2018 Currency Latest bid End 2017 Pct Move Japan yen 111.990 112.67 +0.61 Sing dlr 1.375 1.3373 -2.76 Taiwan dlr 30.796 29.848 -3.08 Korean won 1128.000 1070.50 -5.10 Baht 32.660 32.58 -0.24 Peso 54.090 49.93 -7.69 Rupiah 14885.000 13565 -8.87 Rupee 72.635 63.87 -12.07 Ringgit 4.137 4.0440 -2.25 Yuan 6.870 6.5069 -5.29 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by Richard Borsuk)

Asia Inc second quarter profits grow at slowest pace in nearly two years as trade tensions rise

13 Sep 2018

Asian companies posted their lowest profit growth in nearly two years in the June quarter and earnings are likely to come under further pressure, weighed down by the escalating U.S.-China trade war and high currency volatility, Reuters analyses showed.

Chinese stock markets battered by trade war fears

12 Sep 2018

Chinese stocks have lost more than a fifth of their value in dollar terms this year on concerns that rising U.S. tariffs on Chinese imports would hurt corporate earnings.

Foreign money flows into Asian equities not likely to be sustained: analysts

06 Sep 2018

Overseas buying of Asian equities in August was the highest in seven months, but analysts doubt such inflows could be sustained if the Sino-U.S. trade dispute were to escalate, notwithstanding contagion from Argentina and other volatile emerging markets.

EM ASIA FX-Asian currencies dip on Trump's trade war threats

31 Aug 2018

(Adds Indian rupee, Indonesian rupiah, analyst comments) By Patturaja Murugaboopathy Aug 31 Asian currencies weakened on Friday as concerns mounted that the United States would impose fresh tariffs on China next week, while sharp declines in the Argentina peso also soured risk sentiment. U.S. President Donald Trump said he was ready to impose more tariffs on $200 billion worth of goods from China as soon as the public comment period on the plan ends next week, Bloomberg News reported. The world's two largest economies have applied tariffs to $50 billion of each other's goods and the proposed new U.S. measures would mean about half of Chinese imports will be charged with tariffs by the United States. "If a full-blown trade war kicks off the U.S. dollar is likely to gain," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader. The greenback was likely to find support in the current environment, with sustainable momentum in the U.S. economy and the Federal Reserve lifting rates, he said. Sharp declines in the Argentina peso and Turkish lira were a drag on Asian currencies, especially those with higher external deficits. The Argentina peso fell 13.12 percent on Thursday despite its central bank boosting interest rates as investors doubted President Mauricio Macri's ability to tackle the economic crisis. The Indian rupee hit a new low of 71 per dollar on Friday, while the Indonesian rupiah was hovering near a 20-year low. Traders said India's central bank was likely sporadically selling dollars through state-run banks to prevent a sudden sharp fall, but they didn't expect any major intervention. South Korea's won fell 0.4 percent after the central bank kept monetary policy unchanged on Friday and dampened expectations of further policy tightening this year. China's yuan was set for its fifth consecutive monthly decline, though August losses were marginal compared with a 3 percent decline in both June and July. The central bank's move to revive a "counter-cyclical factor" in its daily fixing propped up the yuan this month. Analysts said they expected regional currencies to feel more pressure in September due to the trade dispute between the United States and China, and economic crises in Argentina and Turkey. "With heightened trade tensions threatening to erupt into a full-blown trade war, the region is on alert for disorderly capital outflows could lead to financial instability, especially in countries that have high external debt levels," DBS said in a research note. DBS also pointed to Malaysia "where short-term external debt is almost as much as foreign reserves, amidst a weakening growth outlook after its May election". Malaysian markets were closed on Friday for a national holiday. The following table shows rates for Asian currencies against the dollar at 0559 GMT. CURRENCIES VS U.S. DOLLAR Change as of 0559 GMT Currency Latest Previous Pct bid day Move Japan yen 110.980 110.96 -0.02 Sing dlr 1.368 1.3674 -0.03 Taiwan dlr 30.714 30.711 -0.01 Korean won 1113.00 1108.6 -0.40 0 Baht 32.720 32.69 -0.09 Peso 53.470 53.43 -0.07 Rupiah 14725.0 14685 -0.27 00 Rupee 70.955 70.74 -0.30 Yuan 6.827 6.8440 +0.25 *Malaysian markets are closed for National day Change so far in 2018 Currency Latest End 2017 Pct bid Move Japan yen 110.980 112.67 +1.52 Sing dlr 1.368 1.3373 -2.23 Taiwan dlr 30.714 29.848 -2.82 Korean won 1113.00 1070.50 -3.82 0 Baht 32.720 32.58 -0.43 Peso 53.470 49.93 -6.62 Rupiah 14725.0 13565 -7.88 00 Rupee 70.955 63.87 -9.99 Ringgit 4.108 4.0440 -1.56 Yuan 6.827 6.5069 -4.69 (Reporting by Patturaja Murugaboopathy in Bengaluru Editing by Darren Schuettler)

EM ASIA FX-Most Asian currencies fall as trade optimism recedes

30 Aug 2018

(Adds details on Indian rupee, China's yuan, analyst comments) By Patturaja Murugaboopathy Aug 30 Most emerging-Asia currencies weakened on Thursday as caution mounted ahead of an upcoming deadline in the China-U.S. trade dispute, while overnight declines in the Turkish lira dulled risk appetite. The dollar index against a basket of six major currencies hovered near a four-week low of 94.434 touched on Tuesday, but the greenback held firm against most emerging Asian currencies. "There are no new catalysts (for Asian currencies)," said Sim Moh Siong, FX strategist at Bank of Singapore, adding that the U.S. review of proposed tariffs on $200 billion of Chinese imports next week puts U.S.-China trade tensions in focus. "For now, the markets are likely to remain wary, even though on the whole, the case against the dollar strength is growing," Sim said. The deadline for public comment on U.S. President Donald Trump's tariffs on $200 billion of Chinese goods is Sept. 5, with the new measures possibly taking effect next month. The 3 percent fall in the Turkish lira the previous day on lingering concerns over Turkey's currency crisis and the Argentina peso's slump to a record low also kept regional currencies in check. Higher oil prices and concerns over current account deficits undermined the Indian rupee, as the currency hit a new low of 70.825 on the day. With a fall of nearly 10 percent this year, the rupee is the worst performer among Asian currencies in 2018. The Turkish crisis put extra scrutiny on emerging market economies with external deficits, including India and its rupee this year, ANZ said in a report. "Excessive intervention can affect the government’s funding plans, especially when the fiscal deficit numbers look stretched and there is a liquidity squeeze. So we don’t expect the Reserve Bank of India to defend any particular level, but to only act to smooth the volatility in the currency," the report said. China's yuan fell amid heavy corporate demand for dollars, erasing all of the gains it had made this week following the central bank's latest move to stabilise the currency. The Indonesian rupiah touched a near three-year low on the day, pulled lower by month-end demand for dollars and higher U.S. bond yields. SOUTH KOREAN WON The South Korean won rose 0.12 percent against the dollar on the day. South Korea's central bank is expected to keep its benchmark interest rate steady on Friday as the job market remained weak and inflation was stubbornly shy of the central bank's target, analysts polled by Reuters said. South Korea, unlike some Asian countries, is not under pressure to hike rates to defend the currency, given its sizeable current account surplus and record foreign reserves, DBS said in a note. "The larger concern for the export-led country is the ongoing trade feud between China and the US that not only threatens supply-chain disruptions but has also led to relatively faster depreciation in other Asian currencies." The following table shows rates for Asian currencies against the dollar at 0539 GMT. CURRENCIES VS U.S. DOLLAR Change as of 0539 GMT Currency Latest Previous Pct bid day Move Japan yen 111.650 111.65 +0.00 Sing dlr 1.366 1.3643 -0.09 Taiwan dlr 30.670 30.706 +0.12 Korean won 1109.30 1110.2 +0.08 0 Baht 32.710 32.7 -0.03 Peso 53.420 53.46 +0.07 Rupiah 14670.0 14650 -0.14 00 Rupee 70.745 70.59 -0.22 Ringgit 4.105 4.105 +0.00 Yuan 6.838 6.8205 -0.25 Change so far in 2018 Currency Latest End 2017 Pct bid Move Japan yen 111.650 112.67 +0.91 Sing dlr 1.366 1.3373 -2.07 Taiwan dlr 30.670 29.848 -2.68 Korean won 1109.30 1070.50 -3.50 0 Baht 32.710 32.58 -0.40 Peso 53.420 49.93 -6.53 Rupiah 14670.0 13565 -7.53 00 Rupee 70.745 63.87 -9.72 Ringgit 4.105 4.0440 -1.49 Yuan 6.838 6.5069 -4.84 (Reporting by Patturaja Murugaboopathy in Bengaluru Editing by Eric Meijer)

Asian currencies rise as U.S.-Mexico deal eases trade worries

28 Aug 2018

Asian currencies edged higher on Tuesday as global trade tensions eased slightly after an agreement between the United States and Mexico to overhaul the North American Free Trade Agreement boosted risk appetites.

World News