Views Article – Sharenet Wealth

Asia, Forex

Caution the buzzword ahead of Fed decision

* Most currencies trade in narrow range * Thai baht to post its first monthly drop in three * Won slips over 2% in July * (Adds text, updates prices) By Aby Jose Koilparambil July 31 (Reuters) – Most Asian currencies were subdued on Wednesday as investors remained cautious ahead of a U.S. Federal Reserve rate decision later in the day, with markets already pricing in a 25-basis- point cut and awaiting clues on whether there will be more. Unlike Asian shares, regional currencies did not weaken significantly on fresh trade war concerns following threats from U.S. President Donald Trump to Beijing. The Fed decision has been the dominant theme for Asian currencies for weeks. A prospective first rate cut in more than a decade notwithstanding, markets will be all ears to the U.S. central bank’s views on global economic health. OCBC Bank analysts said in a note that market participants would watch for any Fed rhetoric that could shed light on whether the expected rate cut is seen as a one-off “insurance” move or the start of an easing cycle. The Thai baht, the Korean won and the Indonesian rupiah all edged up around 0.1%. The baht, the best regional performer so far this year with about a 6% gain, is however set to post its first monthly drop in three – a fall of about 0.3% in July. Thai trade data for June is scheduled to be released later in the day, and with the custom cleared exports posting a lower-than-expected drop and imports declining by a whopping 9.4% margin, the country’s current account balance is slated to benefit. The won, which has slipped the most among the regional peers this year with more than a 5% drop, is en route to post about a 2.3% decline in July. Data released earlier in the day showed South Korea’s June industrial output fell 2.9% month-on-month, while retail sales slid 1.6% during the same period. China’s yuan gained about 1% despite weak factory activity data. An official manufacturing gauge shrank for the third straight month in July, underlining the need for more stimulus to support an economy hit hard by the bruising trade war with the United States. The Indian rupee, the Malaysian ringgit, the Philippine peso and the Taiwan dollar were little changed. CURRENCIES VS U.S. DOLLAR Change on the day at 0508 GMT Currency Latest bid Previous day Pct Move Japan yen 108.540 108.59 +0.05 Sing dlr 1.369 1.3700 +0.07 Taiwan dlr 31.080 31.075 -0.02 Korean won 1180.700 1181.6 +0.08 Baht 30.770 30.81 +0.13 Peso 50.800 50.8 +0.00 Rupiah 14005.000 14015 +0.07 Rupee 68.870 68.86 -0.01 Ringgit 4.125 4.123 -0.05 Yuan 6.881 6.8845 +0.05 Change so far in 2019 Currency Latest bid End 2018 Pct Move Japan yen 108.540 109.56 +0.94 Sing dlr 1.369 1.3627 -0.47 Taiwan dlr 31.080 30.733 -1.12 Korean won 1180.700 1115.70 -5.51 Baht 30.770 32.55 +5.78 Peso 50.800 52.47 +3.29 Rupiah 14005.000 14375 +2.64 Rupee 68.870 69.77 +1.31 Ringgit 4.125 4.1300 +0.12 Yuan 6.881 6.8730 -0.11 (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Kim Coghill)

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