Most Asian currencies firm on hopes of easing trade conflicts

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BENGALURU (July 26): Most Asian currencies strengthened on Thursday, with the dollar weakening after the presidents of the United States and the European Commission agreed to lower trade barriers, alleviating immediate concerns about worsening global trade relations.

"Both the EU and US have agreed to put on hold any plans for tariffs, essentially establishing a trans-Atlantic trade truce," Mizuho analysts said in a note.

"This welcome, but unexpected, positive turn in global trade dynamics almost immediately unravels fears of trans-Atlantic trade war."

Investors are also eyeing the European Central Bank's policy statement due later on Thursday for any references to the pace of monetary policy normalisation.

"An announcement of some sort of deal should aid growth, aid the return of inflation, and aid the ECB and other central banks' plans to ease monetary accommodation," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

Among regional currencies, South Korea's won led the gains, strengthening 0.5% against its US peer while the Indian rupee strengthened for a second straight session, gaining as much as 0.13% on improving risk sentiment.

Taiwan's dollar firmed 0.2%

Singapore's dollar weakened 0.3% while the Thai Baht traded flat.  

Chinese Yuan

The Chinese yuan, which has been under strain from  the intensifying Sino-US trade row, traded 0.3% weaker.

"Any positive developments in the Sino-US trade front should provide some room for recovery for battered EM Asian FX," OCBC analysts said in a note.

China's central bank (PBOC) lifted its official yuan midpoint by the most in three weeks to 6.7662 per dollar on Thursday, reflecting the spot yuan's performance a day earlier and broad weakness in the greenback overnight.

Most recently the PBOC has told some Chinese banks that a prudential capital requirement on them would be eased, Bloomberg reported, to support lending as authorities try to mitigate risks to growth from the nascent Sino-US trade war.

The following table shows rates for Asian currencies against the dollar at 0640 GMT.

CURRENCIES VS US DOLLAR

Currency                   Latest bid   Previous day  % move
Japan yen              110.660                110.97     +0.28
Sing dlr               1.360                  1.3583     -0.15
Taiwan dlr             30.562                 30.632     +0.23
Korean won             1119.300               1126.3     +0.63
Baht                   33.270                  33.27     +0.00
Peso                   53.417                  53.37     -0.09
Rupiah                 14450.000               14455     +0.03
Rupee                  68.703                  68.78     +0.11
Ringgit                4.058                   4.053     -0.12
Yuan                   6.783                  6.7638     -0.28

Change so far in 2018

Currency               Latest bid      End 2017       % move
Japan yen              110.660                112.67     +1.82
Sing dlr               1.360                  1.3373     -1.69
Taiwan dlr             30.562                 29.848     -2.34
Korean won             1119.300              1070.50     -4.36
Baht                   33.270                  32.58     -2.07
Peso                   53.417                  49.93     -6.53
Rupiah                 14450.000               13565     -6.12
Rupee                  68.703                  63.87     -7.03
Ringgit                4.058                  4.0440     -0.34
Yuan                   6.783                  6.5069     -4.07