Most currencies firm, yuan bounces as c.bank soothes markets

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(July 4): Most Asian currencies firmed against the U.S. dollar on Wednesday, recovering some of the previous day's losses, with the yuan bouncing from 11-month lows after the Chinese central bank assured it would keep the currency stable.

The dollar weakened 0.16% against a basket of six major currencies, after posting three consecutive months of gains.

Meanwhile, the yuan firmed sharply, on track for its first two-day winning streak since the middle of June.

The currency rebounded on Tuesday after People's Bank of China (PBOC) Governor Yi Gang said the central bank was closely watching fluctuations in the foreign exchange market and would seek to keep the yuan at a stable and reasonable level.

"The PBOC engaged the yuan airbrake yesterday afternoon and at least for the time being, with the help of Chinese state-owned banks who were seen selling dollars to prop up the Chinese currency, is restoring a sense of calm in regional markets," said Stephen Innes, head of trading Asia-Pacific at OANDA, in a note.

The yuan has been jittery, ahead of a U.S. move later this week to impose tariffs on US$34 billion in Chinese exports to the United States.

"Ultimately, unless there's compromise in the trade dispute, the yuan should remain under pressure," Innes said.

The Thai baht strengthened 0.3%, while the Indian rupee ticked up 0.1%. 

Export-dependent currencies such as the Taiwan dollar and South Korean won firmed 0.3% and 0.2% respectively. 

South Korea's foreign exchange reserves hit a record high in June, exceeding US$400 billion, the central bank said on Wednesday. 

The Singapore dollar also strengthened, rising 0.1%, while the Indonesian rupiah climbed 0.2%.

Elsewhere, the Malaysian ringgit slipped ahead of trade data expected on Thursday.

A Reuters poll estimates that Malaysia's exports in May are expected to grow 6.4% from a year earlier, slowing sharply from the previous month. 
  
Meanwhile, Malaysia's former Prime Minister Najib Razak pleaded not guilty to criminal charges on Wednesday, after being arrested at his home on Tuesday as part of the investigations into allegations of corruption at state fund 1MDB.  

Innes said "unquestionably, this should not go over well with offshore investors and will keep the MYR (Malaysian ringgit) on the defensive." 
    
Third hike for Philippines?

The Philippine peso, which has fallen 6.3% so far this year, was down 0.1% as investors braced for inflation data due on Thursday. 

Philippine annual inflation likely quickened for a sixth straight month in June, a Reuters poll showed, leaving the door open for a third interest rate hike this year.

The country has been plagued by inflation concerns, a result of higher oil prices and a weak peso, prompting the central bank to raise interest rates in May and June.

The plunge in the peso has sparked persistent foreign investor selling of Philippine shares which have lost more than 15% this year, the most among Southeast Asian stock markets.  

Policymakers forecast inflation to peak in the third quarter and return inside the central bank's target range in 2019.
        
The following table shows rates for Asian currencies against the dollar.
    
 CURRENCIES VS U.S. DOLLAR
    
 Change on the day at 0519 GMT

Currency Latest bid Previous day Pct Move
Japan yen 110.450 110.58 +0.12
Sing dlr 1.363 1.3645 +0.14
Taiwan dlr 30.535 30.586 +0.17
Korean won 1115.600 1118.7 +0.28
Baht 33.110 33.2 +0.27
Peso 53.353 53.293 -0.11
Rupiah* 14350.000 14375 +0.17
Rupee* 68.520 68.58 +0.08
Ringgit 4.044 4.041 -0.07
Yuan 6.628 6.6440 +0.24

* Closed for market holiday
                            
 Change so far in 2018

Currency Latest bid End 2017 Pct Move
Japan yen 110.450 112.67 +2.01
Sing dlr 1.363 1.3373 -1.86
Taiwan dlr 30.535 29.848 -2.25
Korean won 1115.600 1070.50 -4.04
Baht 33.110 32.58 -1.60
Peso 53.353 49.977 -6.33
Rupiah 14350.000 13565 -5.47
Rupee 68.520 63.87 -6.79
Ringgit 4.044 4.0440 -0.00
Yuan 6.628 6.5069 -1.82