Most currencies range-bound after U.S. tariffs on Chinese imports kick in

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(July 6): Most Asian currencies traded in thin range on Friday, with  investors anxious after U.S. sanctions on some goods imported from China took effect, potentially setting the world's two biggest economies on their way to a full-blown trade war.

The U.S. tariffs on US$34 billion in Chinese imports took effect at 0401 GMT. President Donald Trump has warned the United States may ultimately target over US$500 billion worth of Chinese goods, an amount that roughly matches last year's total U.S. imports from China.

The Chinese yuan, which has been battered by the trade tensions, slipped 0.2% with Beijing having vowed to immediately retaliate against U.S tarrifs. 

"The implementation was well anticipated and the implementation came with no additional surprise," said Christopher Wong, a senior FX strategist with Maybank.

Escalating United States-China trade tension has created doubts on whether the global growth that benefited regional stocks last year could be sustained. Foreign investors sold Asian equities for a fifth consecutive month in June.

Investors were also cautious, ahead of U.S. nonfarm payrolls data due later in the day.

U.S. employers were expected to continue their brisk hiring in June, while also increasing wages, which would reinforce expectations of robust economic growth in the second quarter and allow the Federal Reserve to continue raising interest rates.

The Indonesian rupiah slipped 0.3% and was among the few currencies that weakened. 

Indonesia's central bank expects a trade surplus in June after noting a "significant" drop in imports last month, Bank Indonesia official Nanang Hendarsah said on Friday.

Higher oil prices had inflated the country's imports bill in April and May, leading to trade deficits that were larger than expected.

The Thai baht and the Indian Rupee strengthened 0.1% each.

"Thailand has a very large current account surplus, which does provide a buffer to the weakening we have seen in regional currencies," said Khoon Goh, ANZ's head of Asia research.

The baht has been resilient in the face of challenging trading conditions, to be the region's second-best performer. 

The rupee was bolstered by a fall in oil prices. India is the world's third-biggest oil importer and higher oil prices threaten to spur inflation and widen its fiscal deficit. 

The South Korean won firmed 0.3%, while the Singapore dollar ticked up 0.1%. 

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

CURRENCIES VS U.S. DOLLAR

Change on the day at 0540 GMT

Currency Latest bid Previous day Pct Move
Japan yen 110.740 110.61 -0.12
Sing dlr 1.364 1.3645 +0.04
Taiwan dlr 30.528 30.540 +0.04
Korean won 1115.400 1118.6 +0.29
Baht 33.190 33.23 +0.12
Peso 53.391 53.397 +0.01
Rupiah 14417.000 14380 -0.26
Rupee 68.893 68.95 +0.08
Ringgit 4.042 4.041 -0.02
Yuan 6.656 6.6371 -0.28

Change so far in 2018

Currency Latest bid End 2017 Pct Move
Japan yen 110.740 112.67 +1.74
Sing dlr 1.364 1.3373 -1.95
Taiwan dlr 30.528 29.848 -2.23
Korean won 1115.400 1070.50 -4.03
Baht 33.190 32.58 -1.84
Peso 53.391 49.977 -6.39
Rupiah 14417.000 13565 -5.91
Rupee 68.893 63.87 -7.29
Ringgit 4.042 4.0440 +0.05
Yuan 6.656 6.5069 -2.24