* Yen posts moderate gains on renewed safe-haven buying
* Chilean peso hits near five-year lows on China concerns
* Aussie dollar underperforms among major currencies
* Kiwi dips before expected central bank rate increase
By Richard Leong
NEW YORK, March 12 Emerging market currencies
fell on Wednesday as investor nervousness over China's economy
and Ukraine's future intensified, rekindling safe-haven bids for
the yen and the Swiss franc.
China's first domestic bond default last week fed fears
about slowing growth of 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 on 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, the Chilean peso, and South
Africa's rand, all of which are usually correlated to the
prices of iron, copper and other raw materials.
The Chilean peso fell to near five-year lows on a deepening
sell-off in copper in Asian trading. Chile, a major copper
exporter, saw its currency last traded at down 0.3 percent
versus the dollar at 537.32 pesos, adding to its month-to-date
loss to 2.6 percent.
The Aussie was down 0.1 percent, while the rand shed 0.6
Copper prices in Shanghai fell five percent overnight.
London prices were close to their lowest in more than three
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 Putin moved troops into the Crimea.
Concerns 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 the other major currencies.
The yen, steadier so far this year after losing a fifth of
its value against the dollar in 2013, was holding strong in
early U.S. trading, up 0.3 percent against the dollar at 102.75
yen. It was up nearly 0.1 percent against the euro at
The Swiss franc, another safehaven currency, strengthened
0.3 percent against the dollar and 0.1 percent versus the euro
at 0.8755 franc and 1.2156 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 DIPS BEFORE RATE DECISION
Ahead of a widely expected rise in New Zealand interest
rates on Thursday, the New Zealand dollar dipped, last traded
down 0.1 percent at 0.8461 to the greenback.
The Reserve Bank of New Zealand was expected to lift
interest rates and to map out a path for a series of increases
over the next two years at least, a Reuters poll shows, taking
the lead among developed economies in tightening policy.
Markets have priced in a 98 percent chance the
Reserve Bank of New Zealand will raise its policy rate by 25
basis points to 2.75 percent after holding it at a
record low for three years.
On Tuesday, the kiwi hit its highest level since flotation
against a currency basket in 1985. On a trade-weighted basis, it
rose as high as 79.68, according to Reuters data.