Asian currencies falter on trade tensions, ahead of US jobs data

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BENGALURU (Aug 3): Concerns about the worsening Sino-UStrade war sent most Asian currencies lower against the dollar on Friday, with the yuan touching its weakest in over a year, dragging other units in the region lower.

Trade tensions helped the dollar gain against a basket of six other major currencies on Friday morning, as the index hit a fresh two-week high of 95.190 overnight.

China vowed on Thursday to retaliate if the United States acted on a threat to raise tariffs to 25% from 10% on US$200 billion in Chinese imports into the United States.

"With trade tensions riding high, the offshore and onshore yuan slump could start a fright in EM Asia FX," said Vishnu Varathan, head economics & strategy at Mizuho Bank, in a note to clients.

The rupee inched lower on Friday and was the top decliner among regional peers, having given up 7% so far this year.

"Even the back-to-back rate hike in India could not prevent the rupee from bucking the sell-off in regional currencies," said Philip Wee and Duncan Tan, strategists at DBS, in a note.

The Reserve Bank of India on Wednesday raised rates for its second consecutive meeting.

Malaysia's ringgit was headed for its worst week in five with the currency weakening 0.4% against the dollar this week. It was 0.1% lower on the day.

The Thai baht declined 0.1% on Friday and notched its ninth weekly loss in 10 while the Singapore dollar weakened 0.6% for the week and was unchanged for the day.

Currency investors in the region are also awaiting US payrolls data due later in the day, which kept market participants cautious.

CHINA'S YUAN

The yuan weakened to a 14-month low against the dollar with the currency on course for its longest streak of weekly losses since the market exchange rate was unified in 1994.

Prior to market opening, the People's Bank of China lowered its midpoint rate to 6.8322 per dollar, 380 pips weaker than its previous fix of 6.7942.

"Weaker than expected manufacturing (purchasing managers' indexes) earlier this week, and another soft print in the services PMI this morning did the renminbi complex no favours," OCBC said in a note.

The country's services sector expanded at the weakest pace in four months in July, with the least growth in new business since December 2015, the services PMI showed on Friday.

The following table shows rates for Asian currencies against the dollar at 0512 GMT.

CURRENCIES VS US DOLLAR

Currency                     Latest bid  Previous day  % move
Japan yen                    111.680     111.65        -0.03
Sing dlr                     1.369       1.3685        +0.00
Taiwan dlr                   30.698      30.682        -0.05
Korean won                   1127.600    1126.1        -0.13
Baht                         33.330      33.2975       -0.10
Peso                         53.093      53.128        +0.07
Rupiah                       14495.000   14470         -0.17
Rupee                        68.698      68.70         +0.00
Ringgit                      4.078       4.074         -0.10
Yuan                         6.871       6.8381        -0.47

Change so far in 2018

Currency                     Latest bid  End 2017      % move
Japan yen                    111.680     112.67        +0.89
Sing dlr                     1.369       1.3373        -2.28
Taiwan dlr                   30.698      29.848        -2.77
Korean won                   1127.600    1070.50       -5.06
Baht                         33.330      32.58         -2.25
Peso                         53.093      49.977        -5.87
Rupiah                       14495.000   13565         -6.42
Rupee                        68.698      63.87         -7.03
Ringgit                      4.078       4.0440        -0.83
Yuan                         6.871       6.5069        -5.29