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Asia, Forex

Asian currencies ease as Fed’s guarded outlook lifts dollar

* Chinese yuan softens to a 6-week low * S. Korean won eases as much as 0.7%; July exports -11.0% y/y (Adds text, updates prices) By Niyati Shetty Aug 1 (Reuters) – Asian currencies weakened against the dollar on Thursday as the U.S. Federal Reserve doused market expectations of a lengthy easing cycle after it delivered its first rate cut in over a decade. While the Fed’s 25-basis-point rate cut on Wednesday was widely expected, Chairman Jerome Powell said it was “not the beginning of a long series of rate cuts”, wrong-footing some traders and lifting the greenback to a two-year high. The Indonesian rupiah was one of the hardest hit in the region, easing 0.5% to 14,085 per dollar. “Against the dovish stances of other central banks, the U.S. dollar has become a de facto strong currency on monetary policy divergences,” DBS Bank said in a note. The Chinese yuan lost as much as 0.5% to its lowest level in six weeks. The country’s central bank kept its main policy rates on hold on Thursday, opting not to follow the Fed cut. Not helping the yuan was the conclusion of brief trade talks between the United States and China on Wednesday with little sign of progress, prolonging an uneasy truce in the year-long trade row. The fallout from the dispute continued to spread across Asia with factory activity in the region contracting further in July. Policymakers worry a sustained downturn in world trade could tip the global economy into a recession, leaving central banks with depleted ammunition to fight off the pressure. The Indian rupee the Malaysian ringgit and the Thai baht each softened about 0.4%. SOUTH KOREAN WON EASES AS ECONOMY FALTERS The won weakened as much as 0.7% to 1,191.10 a dollar, a more than 2-month low as Asia’s fourth largest economy showed further signs of trouble. The country’s exports tumbled for an eighth straight month in July, with persistently weak global demand and an escalating dispute with Japan painting an increasingly gloomy picture for South Korea. And, the row showed no signs of an imminent resolution. Japan is expected to give approval for the removal of South Korea from its list of countries with minimum trade restrictions as early as Friday. A private survey also showed manufacturing activity contracted in July to its lowest in five months. The following table shows rates for Asian currencies against the dollar at 0547 GMT. CURRENCIES VS U.S. DOLLAR Currency Latest bid Previous day Pct Move Japan yen 109.180 108.74 -0.40 Sing dlr 1.375 1.3735 -0.12 Taiwan dlr 31.144 31.096 -0.15 Korean won 1186.700 1183.1 -0.30 Baht 30.830 30.72 -0.36 Peso 51.090 50.98 -0.22 Rupiah 14085.000 14012 -0.52 Rupee 69.055 68.79 -0.38 Ringgit 4.143 4.125 -0.42 Yuan 6.900 6.8840 -0.23 Change so far in 2019 Currency Latest bid End 2018 Pct Move Japan yen 109.180 109.56 +0.35 Sing dlr 1.375 1.3627 -0.91 Taiwan dlr 31.144 30.733 -1.32 Korean won 1186.700 1115.70 -5.98 Baht 30.830 32.55 +5.58 Peso 51.090 52.47 +2.70 Rupiah 14085.000 14375 +2.06 Rupee 69.055 69.77 +1.04 Ringgit 4.143 4.1300 -0.30 Yuan 6.900 6.8730 -0.39 (Reporting by Niyati Shetty in Bengaluru Editing by Shri Navaratnam)

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