Most Asian currencies cautious before expected Fed hike, local rates seen following

* The Fed likely to raise rates by 25 bps
* Philippine, Indonesia, Taiwan c.banks to meet on Thursday
* Graphic: EM Asia FX rates in 2018

(Updates with regional central banks likely policy decisions,
impact of post-Fed move)
By Nikhil Nainan
Sept 26 (Reuters) - Most Asian currencies traded cautiously
on Wednesday, ahead of a widely expected rate hike from the U.S.
Federal Reserve which may set the tone for some major regional
central banks due to announce policy decisions on Thursday.
The Fed is expected to raise rates for the eighth time since
late 2015, with investors betting on another hike before
year-end, though the outlook for 2019 is less clear and that is
where many investors will be focused.
"While a rate hike is fully priced in, the market is
becoming increasingly convinced that the Fed will be able to
deliver many more hikes," DBS said in a note.
"We will pay close attention to possibly stronger
growth/inflation/rates forecasts in the Fed's economic
The greenback has benefited from a hawkish rate outlook all
year, to the dismay of regional emerging markets which have
grappled with rising U.S. debt yields and capital outflows.
The dollar index against a basket of six major
currencies stuck to tight ranges on Wednesday, ahead of the Fed
The intensifying trade row between China and the United
States has only further clouded the global economic outlook and
has prompted investors to wager that most Asian currencies will
continue to come under pressure.
"If U.S.-China trade tensions mount again while the Fed
fails to clearly exhibit intent to keep the normalisation pace
steady, emerging market Asia FX could perhaps see more
volatility ahead," Mizuho Bank said in a note.
The retreating Indian rupee, Asia's worst
performer, may find some support next week if the Reserve Bank
of India raises interest rates as forecast in a Reuters poll,
though rising oil prices will continue to weigh.
The rupee gained 0.1 percent to 72.595 per dollar.
But with Brent crude prices at over $81 a barrel, the trend
does not bode well for India, which imports about 80 percent of
its oil needs.
South Korean markets will re-open on Thursday after three
public holidays.


Three regional central banks are due to meet on Thursday,
just hours after the Fed announces its decision, with the
Philippine and Indonesian monetary authorities seen as all but
certain to raise rates to defend their currencies.

Indonesia's rupiah flirted with 14,940 to the dollar
for much of the session, while a weakening from that level would
take the currency to its softest on record against the
greenback, with a fifth Bank Indonesia (BI) hike seen likely
on Thursday.
Previous attempts by the government and BI have failed to
stem a decline in the rupiah of more than 9 percent against the
dollar this year.
BI has hiked its benchmark rate by 125 basis points this
year, while the government has taken several steps to curb
imports, including imposing high trade tariffs and delaying big
infrastructure projects.
The Philippine peso traversed positive and negative
territory around 54.255 per dollar, after falling to its weakest
since end-2005 on Tuesday.
The Bangko Sentral ng Pilipinas is widely expected to raise
its key interest rate by another 50 basis points to 4.5 percent
on Thursday. It has already raised rates by 100 bps over three
hikes since May.
Inflation, one of its key challenges, is well above the
central bank's target range 6.4 percent in August, prompting
policymakers to promise "strong immediate action" to curb rising
Taiwan's central bank is also meeting on Thursday but is
expected to leave its policy rate steady for a ninth straight
quarter, a Reuters poll found.
Change on the day at 0452 GMT
Currency Latest bid Previous day Pct Move
Japan yen 112.910 112.97 +0.05
Sing dlr 1.365 1.3658 +0.07
Taiwan dlr 30.661 30.675 +0.05
Baht 32.440 32.425 -0.05
Peso 54.255 54.239 -0.03
Rupiah 14935.000 14915 -0.13
Rupee 72.595 72.69 +0.13
Ringgit 4.140 4.135 -0.12
Yuan 6.872 6.8610 -0.16

Change so far in 2018
Currency Latest bid End 2017 Pct Move
Japan yen 112.910 112.67 -0.21
Sing dlr 1.365 1.3373 -2.02
Taiwan dlr 30.661 29.848 -2.65
Korean won 1115.300 1070.50 -4.02
Baht 32.440 32.58 +0.43
Peso 54.255 49.977 -7.88
Rupiah 14935.000 13565 -9.17
Rupee 72.595 63.87 -12.02
Ringgit 4.140 4.0440 -2.32
Yuan 6.872 6.5069 -5.31

(Reporting by Nikhil Kurian Nainan in Bengaluru
Editing by Eric Meijer)

First Published: 2018-09-26 03:49:49
Updated 2018-09-26 08:01:49

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