Asian currencies drop as stronger dollar and trade tensions keep pressure on
* Trump latest tariff threat piles pressure on EMFX
* Indian rupee hits fresh low against the dollar
* Indonesia's rupiah weakness trend continues
(Adds text, updates prices)
By Nikhil Nainan
Sept 10 (Reuters) - Asian currencies traded lower on Monday
as strong U.S. jobs data supported the dollar, while confidence
was eroded by U.S. President Donald Trump once again raising the
stakes in his country's trade dispute with China.
Trump warned China on Friday that he was ready to slap
tariffs on virtually all Chinese imports into the United States,
threatening duties on another $267 billion of goods on top of
$200 billion in imports primed for levies in coming days and
"U.S. President Donald Trump is holding China's feet to the
fire on trade with his threat to impose tariffs on all Chinese
goods entering the United States," DBS bank said in a note.
U.S. jobs growth data out on Friday increased the prospect
that the Federal Reserve will raise rates twice more this year.
The dollar index, which measures the greenback against a
basket of six currencies, edged higher to 95.464, after
advancing more than 0.3 percent on Friday.
The Indian rupee fell sharply to its lowest level
on record against the dollar, and was last down at 72.388. This
comes after the central bank intervened heavily on Friday to
defend the 72 rupee level.
Inflationary concerns stemming from higher crude oil prices
and India's perennial fiscal and trade deficits have seen the
rupee cement itself as the region's worst performing currency
and has also seen its benchmark 10-year bond yield rise to its
highest since late 2014.
"Sharp bond outflows are finally manifesting significantly
in the bond market while rolling net bond and equity flows have
collapsed to neutral, leaving the rupee and government bonds
vulnerable to further weakness," OCOC Bank said in a note.
Indonesia's rupiah, the region's second worst performer,
weakened 0.4 percent to 14,870 to the dollar, hovering
near all time lows.
Bank Indonesia (BI) has been one of the most active central
banks in its attempts to bolster the fragile rupiah, which has
lost nearly 9 percent so far this year, even after four rate
hikes since May.
"The emerging market wobble was going to happen when global
central banks moved to reduce quantitative easing definitively,"
Stephen Innes, head of trading Asia for Oanda, said in a note.
"Unfortunately, the toxic combination of trade wars, rising
U.S. interest rates and a stronger dollar along with higher oil
prices has brought that date considerably forward."
Elsewhere, the Philippine peso dropped 0.3 percent to
53.85 per dollar, marking a difficult day for local equity
markets which fell more than 1 percent to their lowest in over 3
Trade reliant currencies, such as the South Korean won
, Taiwan dollar, and the Singapore dollar
were all weaker, with the won losing the most, down 0.6
Malaysia markets were closed for a public holiday and will
re-open on Wednesday.
The latest U.S. tariff threat raises the stakes in an
already tense trade dispute between the United States and China,
with Beijing warning it would retaliate if Washington imposes
any new measures.
However, it is running out of running out of room to match
the U.S. tariffs dollar-for-dollar, raising concerns it could
resort to other measures such as weakening the yuan or taking
action against U.S. companies in China.
The yuan weakened 0.2 percent to 6.86 per dollar.
"Long dollar-yuan should offer a good hedge against an
escalation of a trade war as the easiest, and most potent
retaliation would be for the PBOC to guide the yuan weaker."
"But this is probably the least attractive measure from a
local investor's perspective as it could indeed trigger waves of
capital outflows and further dent sentiment on domestic
CURRENCIES VS U.S. DOLLAR
Change on the day at 0509 GMT
Currency Latest bid Previous day Pct Move
Japan yen 110.940 111.05 +0.10
Sing dlr 1.381 1.3786 -0.15
Taiwan dlr 30.794 30.776 -0.06
Korean won 1129.500 1122.8 -0.59
Baht 32.850 32.78 -0.21
Peso 53.850 53.71 -0.26
Rupiah 14870.000 14815 -0.37
Rupee 72.388 71.73 -0.91
Yuan 6.860 6.8492 -0.16
Change so far in 2018
Currency Latest bid End 2017 Pct Move
Japan yen 110.940 112.67 +1.56
Sing dlr 1.381 1.3373 -3.14
Taiwan dlr 30.794 29.848 -3.07
Korean won 1129.500 1070.50 -5.22
Baht 32.850 32.58 -0.82
Peso 53.850 49.977 -7.19
Rupiah 14870.000 13565 -8.78
Rupee 72.388 63.87 -11.77
Yuan 6.860 6.5069 -5.15
(Reporting by Nikhil Kurian Nainan in Bengaluru)
First Published: 2018-09-10 03:49:28
Updated 2018-09-10 08:05:22
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