Robust China data lifts Asian currencies, S'pore dollar slips on soft outlook

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(Oct 13): Rosy Chinese data and the soft US dollar lifted emerging Asian currencies on Friday, except for the Singapore dollar which  dipped on the central bank's cautious outlook for the economy.

China's yuan perked up to its highest in three weeks and was headed for weekly gains, helped by weakness in the US dollar and encouraging trade data.

Exports rose 8.1%, below forecasts of 8.8% but handily beating August's 5.5%.

Imports in dollar-denominated terms grew 18.7% in September from a year earlier, beating analysts' forecasts for a 13.5% expansion and accelerating from 13.3% in August.

The gain was stronger than the most optimistic forecast in a Reuters poll of analysts.

The trade data also showed China's iron ore imports vaulted to a record high in September as the world's top steel producer imported ore to raise production ahead of the winter crackdown on air pollution.

"China trade data seems to be making the big risk appeal in the region and it seems to be the overriding factor today," said Stephen Innes, senior trader at FX broker OANDA.

Softness in the US dollar also added cheer to the emerging Asian currencies. The greenback was muted as investors cautiously awaited inflation data which could shed more light on whether the US Federal Reserve will hike interest rates later in the year.

Among Asian currencies the Indian rupee appreciated for a fifth consecutive day, rising to levels unseen since September 25 after data showed that the country's retail inflation remained steady in September.

The report also showed that the chances of a rate cut remain dim as the central bank expects higher inflation in the coming months.

The Malaysian ringgit picked up marginally. The world's second-largest palm oil producer said it planned to accelerate its crude palm oil export tax to 6.5% in November.

The Philippine peso is staying afloat after being a hair's breadth away from an 11-year dip at one point.

"I think we need to take a more balanced view on the peso. Investor optimism in the country's relatively high growth prospects is reflected in the record high stock market," said Philip Wee, senior currency economist at DBS Bank.

"The growth is, however, accompanied by the return of the first twin (budget and trade) deficit since 2002, and inflation rising back above the 3% policy rate. This is reflected more in the Philippine peso," Wee said.

The Thai market was closed for a market holiday.  

SINGAPORE DOLLAR

The Singapore dollar retreated, breaking a four-day winning streak as the central bank cited the likelihood of a slowdown in growth in 2018.

The Monetary Authority of Singapore keep its neutral stance on monetary policy settings and maintained the local currency's policy band, the pace at which it can appreciate against a basket of rivals, at zero percent.

"The benign tone for inflation and the cautious outlook for 2018 growth to be slightly below this year are likely to dampen expectations for a tightening at the next review in April 2018," DBS Research said in a note.

Meanwhile, the trade-reliant economy's gross domestic product growth outpaced expectations in the third quarter.

On a weekly basis the currency appreciated, after four straight weeks in the red.    

The following table shows rates for Asian currencies against the US dollar at 0512 GMT.

CURRENCIES VS US DOLLAR
Change on the day at 0512 GMT

Currency                      Latest bid  Previous day    % move
Japan yen                     112.060           112.27  +0.19
Sing dlr                      1.354             1.3521  -0.16
Taiwan dlr                    30.182            30.213  +0.10
Korean won                    1129.900          1133.2  +0.29
Peso                          51.420             51.43  +0.02
Rupiah                        13503.000          13504  +0.01
Rupee                         64.910             65.08  +0.26
Ringgit                       4.217               4.22  +0.07
Yuan                          6.577             6.5897  +0.20

Change so far in 2017

Currency                      Latest bid  End 2016        % move
Japan yen                     112.060           117.07  +4.47
Sing dlr                      1.354             1.4490  +6.99
Taiwan dlr                    30.182            32.279  +6.95
Korean won                    1129.900         1207.70  +6.89
Peso                          51.420             49.72  -3.31
Rupiah                        13503.000          13470  -0.24
Rupee                         64.910             67.92  +4.64
Ringgit                       4.217             4.4845  +6.34
Yuan                          6.577             6.9467  +5.63