EM ASIA FX-US rate hike views enfeeble Asia FX; ringgit nears 14-month low

Source : REUTERS
Last Updated: Wed, Nov 23, 2016 09:40 hrs

* Outflows, importers hurt ringgit; Malaysia c.bank to keep rates * Rupiah near 2-week low on equity outflows; Indonesia bonds hit (Adds text, updates prices) By Jongwoo Cheon SINGAPORE, Nov 23 (Reuters) - Most emerging Asian currencies eased on Wednesday as the dollar hovered around a 13-1/2-year peak and as expectations grew that the Federal Reserve may raise interest rates further next year after an expected hike in December. The Malaysian ringgit hit a near 14-month low as short-term foreign investors kept selling local financial assets. With the currency's recent sharp weakening, the country's central bank is expected to leave its benchmark interest rate unchanged in a policy decision later in the day. Indonesia's rupiah fell to around a two-week trough as foreign investors continued to cut equity holdings, while most government bond prices slid. The U.S. dollar traded at 101.01 against a basket of six major currencies, not far from Friday's peak of 101.48, the strongest since April 2003. U.S. home resales rose in October to their highest level in near a decade, data showed on Tuesday, indicating a pickup in the world's top economy. Emerging Asian currencies and bonds have been under pressure from the greenback's strength amid expectations that U.S. President-elect Donald Trump's policies to boost fiscal spending will lift inflation and interest rates. U.S. Treasury yields were already rising despite the recent pullback. His protectionist stance on trade has also been hurting the currencies of Asia's export-reliant economies. "Regional outflows should persist given the uncertainties around U.S. interest rate trajectory and President-elect Trump's trade policies," said Stephen Innes, senior FX trader for FX broker OANDA in Singapore. "The fear of massive redemptions may accelerate the feedback loop if local EM conditions continue to deteriorate, which will put additional pressure on regional bond and equity markets." RINGGIT The ringgit lost 0.6 percent to 4.4430 per dollar, its weakest since Oct. 2, 2015. The Malaysian currency came under further pressure from dollar demand from importers for payments. Currency traders were little fazed by data on Tuesday showing the country's international reserves rose in the first two weeks of November, even though reserves are expected to fall on surging capital outflows. A senior Malaysian bank trader in Kuala Lumpur said the dollar's strength will keep hurting sentiment on the ringgit. "Stay with the USD. Trump will make the USD firm," said the trader. RUPIAH The rupiah slid 0.3 percent to 13,474 per dollar, its weakest since Nov. 11. Foreign investors were net sellers in Indonesia's stock market over the previous 10 straight sessions, unloading a combined net 6.8 trillion rupiah ($504.7 million) worth of equities during the period. Prices of most Indonesian government bonds, especially long-term debts, fell with the 10-year yield at 7.955 percent, its highest since March 4. CURRENCIES VS U.S. DOLLAR Change on the day at 0340 GMT Currency Latest bid Previous day Pct Move Japan yen 111.06 111.14 +0.07 Sing dlr 1.4267 1.4235 -0.22 Taiwan dlr 31.885 31.945 +0.19 Korean won 1174.81 1176.10 +0.11 Baht 35.50 35.43 -0.20 Peso 49.940 49.850 -0.18 Rupiah 13470 13440 -0.22 Rupee 68.42 68.25 -0.24 Ringgit 4.4390 4.4170 -0.50 Yuan 6.8928 6.8920 -0.01 Change so far in 2016 Currency Latest bid End prev year Pct Move Japan yen 111.06 120.30 +8.32 Sing dlr 1.4267 1.4177 -0.63 Taiwan dlr 31.885 33.066 +3.70 Korean won 1174.81 1172.50 -0.20 Baht 35.50 36.00 +1.40 Peso 49.94 47.06 -5.77 Rupiah 13470 13785 +2.34 Rupee 68.42 66.15 -3.31 Ringgit 4.4390 4.2935 -3.28 Yuan 6.8928 6.4936 -5.79 (Reporting by Jongwoo Cheon; Editing by Kim Coghill)



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