Most currencies firm against weaker dollar, S.Korean won leads gains

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BENGALURU (June 29): Most Asian currencies firmed against the US dollar on Friday as market participants kept an eye out for local economic data to provide trading cues.

The dollar itself weakened against a euro strengthened by European Union leaders striking a migration deal at their summit.

The dollar index against a basket of six major currencies fell as much as 0.67% to 94.749 on Friday after having risen to as high as 95.534 on Thursday, a level last seen almost a year ago.

On a data-heavy day for the Asian region, Bank Indonesia (BI) was seen in a Reuters poll as likely to hike again its key interest rate on Friday following two hikes in May.

The Indonesian rupiah firmed 0.17% on Friday, on track to end higher, after touching its lowest since October 2015 during the day.    

"Key to watch today is the BI rate decision — where another hike to 5% has already been discounted," OCBC analysts said in a note.

A Reuters poll found any BI rate hike would most likely be intended to boost the fragile rupiah and contain capital outflows.

Indonesia's annual inflation is already seen slowing in June from a month earlier.

Despite a rate hike in the offing, a Reuters positioning poll on Thursday showed short positions on the rupiah at their highest since October, 2015.

The Chinese yuan recovered from earlier losses and was on course to firm for the first time in seven sessions.

The currency had lost as much as 0.29% during the session to touch its weakest against the dollar since mid-November, 2017. It has lost about 3.1% over the course of June.

The People's Bank of China loosened the yuan's official midpoint fixing for an eighth straight session to 6.6166 to the dollar.

South Korea's won and Taiwan's dollar firmed 0.87% and 0.28%, respectively.

Data on Friday showed the export-reliant South Korean economy posted industral output growth of 0.9% in May, beating the 0.5% expected from a Reuters poll.

Singapore's dollar firmed 0.26%, while the Philippine peso was up about 0.06%.

Thailand is due to publish trade data on Friday and its baht slipped slightly.

INDIAN RUPEE

The Indian rupee's 0.3% gain set it on track to gain for the first time this week. The currency hit an all-time low of 69.09 to the dollar on Thursday and has lost 1.7% during June as investors have reallocated capital out of the country.

A 0.1% slip in Brent crude prices was a tailwind for the rupee's gains on Friday, given the importance of imported oil to the economy.

India has adequate "firepower" in foreign exchange reserves to deal with the current volatility in the rupee, the country's Economic Affairs Secretary told reporters on Friday, with the fiscal deficit and currency reserves data expected later in the day.  

CURRENCIES VS US DOLLAR

The following table shows rates for Asian currencies against the dollar at 0457 GMT.

Change on day at 0457 GMT

Currency                   Latest bid  Previous day  % move
Japan yen                  110.670           110.48     -0.17
Sing dlr                   1.364             1.3675     +0.26
Taiwan dlr                 30.500            30.586     +0.28
Korean won                 1114.500          1124.2     +0.87
Baht                       33.130             33.12     -0.03
Peso                       53.408            53.439     +0.06
Rupiah                     14360.000          14385     +0.17
Rupee                      68.583             68.79     +0.30
Ringgit                    4.034               4.04     +0.15
Yuan                       6.613             6.6248     +0.18

Change so far in 2018

Currency                   Latest bid  End 2017      % move
Japan yen                  110.670           112.67     +1.81
Sing dlr                   1.364             1.3373     -1.95
Taiwan dlr                 30.500            29.848     -2.14
Korean won                 1114.500         1070.50     -3.95
Baht                       33.130             32.58     -1.66
Peso                       53.408            49.977     -6.42
Rupiah                     14360.000          13565     -5.54
Rupee                      68.583             63.87     -6.87
Ringgit                    4.034             4.0440     +0.25
Yuan                       6.613             6.5069     -1.61