Asian currencies rise as yuan returns from holiday

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(Oct 9): Asian currencies traded in positive territory on Monday and the yuan reopened a little firmer in thin liquidity after China's week-long National day holiday as investors waited on the sidelines for a national leadership meeting next week.

Stability in the yuan would remain the priority for the authorities in the run-up to the party congress, which starts on Oct 18.

An unfavourable survey of China's service industries showing the sector's growth slipped to a 21-month low failed to push the currency down.

The yuan was helped by investors finding reasons for optimism in uninspiring US jobs data last week, and the fact underlying recovery has been continuing so far, said Vishnu Varathan, senior economist from Mizuho Bank.

The US non-farm payroll data showed its first monthly decline in seven years as hurricanes Harvey and Irma disrupted production and left displaced workers temporarily unemployed.

The report also featured the unemployment rate hitting a more than 16½-year low and annual wage growth, which accelerated to 2.9%.

"Stronger US private wage growth could bolster the USD’s ongoing strength versus emerging Asian currencies before US President Trump nominates the next Fed chair and the US House of Representatives votes on the GOP (Republican Party) tax reform plan," Scotiabank said in a note.

The dollar index, which measures the greenback against a basket of rivals, lost marginally as concerns over North Korea preparing for missile tests resurfaced.

News that a Russian lawmaker who just returned from a visit to Pyongyang said North Korea was preparing to test a missile which it expected would reach the west coast of the United States helped to keep the safe-haven yen afloat but failed to bolster the other currencies.

"North Korea risks have played some parts in pushing USD yields off highs but I don’t see it having an over-arching effect on currencies because it doesnt really square with the wider picture of risks," Mizhuo's Varathan said.

Among regional currencies the Singapore dollar inched up after two days in the red. Oil prices inched up on hopes that Saudi Arabia would continue to curb its production to support prices

The Thai baht rose marginally. Thailand obtained an aviation safety upgrade from the UN International Civil Aviation Organization, enabling the Thai airline industry to operate in more interational routes.

The Indian rupee and the Malasian Ringgit nudged higher.

South Korea won and Taiwan dollar markets were closed for a holiday.

THE PHILIPPINE PESO

The Philippine peso ticked up, ahead of the release of August trade data later in the week.

"We reckon that import growth may remain in the negative, on a year-on-year basis, until the year-end," DBS Research said in a note.

Investors are also waiting for the tax reform measures, which will be sent to the Senate for approval later this week.

The tax measures are central to President Rodrigo Duterte's ambitious plans to foster higher, more sustainable growth through his US$180 billion "Build, Build, Build" infrastructure campaign.

The following table shows rates for Asian currencies against the dollar at 0620 GMT.

CURRENCIES VS US DOLLAR
Change on the day at 0620 GMT

Currency                        Latest bid     Previous day    % move
Japan yen                       112.610          112.63  +0.02
Sing dlr                        1.364            1.3644  +0.05
Baht                            33.380            33.43  +0.15
Peso                            51.170            51.15  -0.04
Rupiah                          13497.000         13503  +0.04
Rupee                           65.318            65.38  +0.09
Ringgit                         4.227             4.236  +0.21
Yuan                            6.636            6.6528  +0.25

Change so far

Currency                        Latest bid  End 2016       % move
Japan yen                       112.610          117.07  +3.96
Sing dlr                        1.364            1.4490  +6.26
Baht                            33.380            35.80  +7.25
Peso                            51.170            49.72  -2.83
Rupiah                          13497.000         13470  -0.20
Rupee                           65.318            67.92  +3.98
Ringgit                         4.227            4.4845  +6.09
Yuan                            6.636            6.9467  +4.68