* Renewed safe-haven buying supports yen, Swiss franc
* Chilean peso rebounds after near 5-year lows on China
* Aussie dollar treads water as commodities pressured
* Kiwi dollar rises after expected central bank rate
By Richard Leong
NEW YORK, March 12 Emerging market currencies
rose moderately on Wednesday, rebounding from earlier losses as
investors remained nervous over China's economy and Ukraine's
future, supporting safe-haven demand for the yen and the Swiss
Relative resilience in the euro and dollar signalled an
unwillingness to turn defensive, and most developed and emerging
market currencies traded in narrow ranges, analysts said.
"People are reluctant to make big bets right now," said Marc
Chandler, chief global currency strategist at Brown Brothers
Harriman & Co in New York. "People are just reducing their short
position in emerging market exposure."
China's first domestic bond default last week fed fears
about slowing growth in the world's second-biggest economy and
its demand for copper and other raw materials. This has
pummelled the Australian dollar, Chilean peso, the South African
rand and other currencies tied to commodity prices.
The diplomatic stalemate between Russia and the West over
Ukraine and military moves by both sides have led investors to
further cut their exposure to riskier currencies, analysts said.
"China has been a concern with its economic data which have
been on the softer side. We have been weak with commodity
currencies so far this week," said Dean Popplewell, chief
currency strategist at Oanda in Toronto.
The Aussie dollar, the Chilean peso, and South
Africa's rand, which are usually correlated to the prices
of iron, copper and other raw materials, fell in overnight
trading before staging a comeback as Wall Street stocks retraced
much of their initial losses.
The Chilean peso fell to near five-year lows on a deepening
selloff in copper in Asian trading. Chile, a major copper
exporter, saw its currency rise 0.5 percent versus the dollar at
572.08 pesos, reducing its month-to-date loss to 2.4 percent.
The Aussie gained 0.2 percent, while the rand rose 0.2
Copper prices in Shanghai fell five percent overnight.
London prices were close to their lowest in more than three
years. A fourth day of losses in
copper compounded investors' anxiety, underpinned by the ongoing
tension in Ukraine.
"Everything is on a knife's edge with the political
situation there," Popplewell said.
Dealers said the rouble was propped up by central
bank support as Russian stock indexes fell again on Wednesday,
reacting to the growing chance of Western sanctions over Crimea.
The rouble slipped 0.1 percent against the dollar at 36.49
roubles, within striking distance of the record low of 36.675
set on March 3 after Russian President Vladimir Putin moved
troops into the Crimea.
Concern about China and Ukraine has been a net positive for
the yen, a safe haven in times of economic stress, but had
little visible impact on other major currencies.
The yen, steadier so far this year after losing a fifth of
its value against the dollar in 2013, was up 0.3 percent against
the dollar at 102.70 yen. Versus the euro, it was at
The Swiss franc, another safe-haven currency, strengthened
0.5 percent against the dollar and 0.2 percent versus the euro
at 0.8739 franc and 1.2152 franc, respectively.
"If there's any dominant theme, it's one of 'risk-off,'
given the concern over the slowdown in China and its financial
problems," said Daragh Maher, a strategist with HSBC in London.
"The next break in that might not come until we see more Chinese
Chinese industrial output, investment and retail sales
figures are all due at 0530 GMT on Thursday.
KIWI RISES AFTER RATE HIKE
After a widely expected rise in New Zealand interest rates
on Thursday, the New Zealand dollar rose 0.4 percent to 0.8505
to the greenback, near the four-plus month high set last week.
The Reserve Bank of New Zealand as expected lifted interest
rates and signalled more increases are likely to return them to
levels which are not longer stimulative as its economy gained
The Reserve Bank of New Zealand raised its policy rate by 25
basis points to 2.75 percent after holding it at a
record low for three years.