EM ASIA FX-Singapore dlr at 7-mth low as grim Q3 GDP keeps easing bets alive; baht up

Source : REUTERS
Last Updated: Fri, Oct 14, 2016 11:00 hrs

* Singapore dlr briefly up after MAS stands pat * Baht gains on hopes for calm after king's death * Asia FX up on China data, but weekly losses seen (Adds more details, analysts) By Jongwoo Cheon SINGAPORE, Oct 14 (Reuters) - The Singapore dollar fell to a seven-month low on Friday after the trade-reliant economy unexpectedly contracted in the third quarter, keeping expectations of further policy easing alive. The Thai baht rose on hopes of an orderly succession after the death on Thursday of revered King Bhumibol Adulyadej, the world's longest-reigning monarch. Most other emerging Asian currencies gained as data showed China's producer prices surprisingly rose in September for the first time in nearly five years, easing concerns over industrial companies' cash flow and their ability to service their massive debts. Though the Monetary Authority of Singapore (MAS) kept policy unchanged as expected earlier in the day, the disappointing GDP reading and gloomy global outlook reinforced views that the central bank will have to ease in future. The Singapore dollar lost 0.6 percent to 1.3894 versus the U.S. dollar, its weakest since March 4. The economy shrank 4.1 percent in July-September on a seasonally adjusted annualised basis from the previous three months, defying the median forecast of a 0.3 percent growth. "If global macro and price pressures deteriorate precipitously in the intervening months to April 2017, we would lean towards a re-centring lower," said Emmanuel Ng, foreign exchange strategist at OCBC Bank, in Singapore. "The disappointing Q3 GDP and somewhat dovish overtones in the policy statement may leave the USD/SGD looking for further hard room on the upside if broad USD resilience re-emerges," Ng said. OCBC Bank retained its tactical objective for the Singapore dollar at 1.4040 against the greenback, he added. The MAS reviews its exchange-rate based monetary policy twice a year, in April and October. It surprised markets by easing in April. It manages monetary policy by changes to the exchange rate, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners because trade flows dwarf the city-state's economy. BAHT UP The baht gained as much as 1.3 percent in early trade as Thai financial assets stabilised and the government urged the country to remain calm after the death of the king. Bangkok shares rose 4 percent, while most government bond prices advanced. While consumer spending and activity could decline as the nation goes into mourning, major disruptions to the economy are not expected if a transition is smooth, analysts and diplomats said. The governor of the Bank of Thailand said markets were still relatively stable and that it would "ook after" liquidity of the baht in the vent of any tightening. Beyond political uncertainties, macroeconomic factors remain favourable to the baht, said Saktiandi Supaat, Maybank's head of FX research, in a note. "A combination of accommodative monetary policy and expansionary fiscal policy should continue to support the economy." Saktiandi said. "Once concerns about the royal succession have dissipated and calm and political stability returns, foreign capital should continue to flow back into the kingdom." WEEKLY ASIA FX LOSSES Despite Friday's gains, most emerging Asian currencies were set for weekly losses as the U.S. dollar firms on growing expectations that the Federal Reserve will raise interest rates in December. "Today's rebound is just position unwinding as some Asian currencies have been oversold recently," said Qi Gao, FX strategist for Scotiabank in Singapore. "I still prefer to buy dollar against Asian FX on dips ahead of December Fed meeting." The Chinese yuan was on the course for the largest weekly loss since January, having slid 0.7 percent. Disappointing September trade data raised speculations that Beijing may allow the renminbi to depreciation further to support the economy. South Korea's won led weekly regional losses, having lost 1.7 percent against the dollar so far this week. Foreign investors sold Seoul shares as Samsung Electronics Co Ltd said it scrapped its fire-prone Galaxy Note 7 smartphone. The decision ignited some concerns over a slowdown in exports. The Malaysian ringgit has slumped 1.3 percent throughout this week. Malaysia reported bond outflows of $2 billion in September, the largest monthly bond outflows since August last year, when the country's markets tumbled on a political crisis linked Prime Minister Najib Razak and corruption allegations involving indebted state fund 1Malaysia Development Berhad (1MDB). CURRENCIES VS U.S. DOLLAR Change on the day at 0500 GMT Currency Latest bid Previous day Pct Move Japan yen 104.06 103.72 -0.33 Sing dlr 1.3887 1.3815 -0.52 Taiwan dlr 31.705 31.760 +0.17 Korean won 1135.00 1135.90 +0.08 Baht 35.27 35.55 +0.80 Peso 48.420 48.340 -0.17 Rupiah 13060 13075 +0.11 Rupee 66.85 66.93 +0.12 Ringgit 4.2100 4.2110 +0.02 Yuan 6.7245 6.7256 +0.02 Change so far in 2016 Currency Latest bid End prev year Pct Move Japan yen 104.06 120.30 +15.61 Sing dlr 1.3887 1.4177 +2.09 Taiwan dlr 31.705 33.066 +4.29 Korean won 1135.00 1172.50 +3.30 Baht 35.27 36.00 +2.07 Peso 48.42 47.06 -2.81 Rupiah 13060 13785 +5.55 Rupee 66.85 66.15 -1.04 Ringgit 4.2100 4.2935 +1.98 Yuan 6.7245 6.4936 -3.43 (Reporting by Jongwoo Cheon; Editing by Kim Coghill)



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