September 26, 2017 / 6:28 AM / a year ago

EM ASIA FX-Asian currencies fall on renewed North Korea tensions

 (Adds text, updates prices)
    By Patturaja  Murugaboopathy 
    Sept 26 (Reuters) - Asian currencies languished on Tuesday
as tensions flared up  amid an escalating war of words between
North Korea and the United States, driving investors to safe
haven assets.
    North Korea's foreign minister Ri Yong Ho said on Monday
that President Donald Trump had declared war on the country and
that Pyongyang reserved the right to take countermeasures,
including shooting down U.S. bombers even if they are not in its
air space.
    The Japanese yen was up 0.1 percent against the
dollar, while most other regional currencies tumbled on the day.
    "There has been a risk-off situation. As a result we see EM
currencies being sold off and that carried over into the Asian
currencies space," said Sim Moh Siong, FX strategist at Bank of
    Over the last two weeks, the dollar advanced against
emerging Asian currencies bolstered by odds of another interest
rate hike this year and analysts said a new tax plan to be
unveiled on Wednesday could further prop up the greenback.
    U.S. President Donald Trump and his team of Republican tax
policymakers are expected to call for a corporate income tax
target rate possibly within a range of 18-23 percent, down from
the current rate of 35 percent.
    The South Korean won was the biggest loser among
regional currencies and the soaring risk sentiment was also
evident on its credit default swap prices, as South Korea's
sovereign CDS spread widened to a 19-month high. 
    The Indonesian rupiah dipped to a one-month low on
the back of month-end corporate demand for the dollar, however
the local currency was supported by a rally in bond prices.

    The Indian rupee too followed suit, tumbling to a
six-month low on corporate dollar purchases and weak equities.
The local benchmark index fell more than half a percent.
    The Philippine peso was down 0.16 percent against
the dollar on the day.
    The peso is the only Asian currency that has declined
against the dollar so far this year.
    On Tuesday, central bank Governor Nestor Espenilla said a
decline in the Philippine peso was in line with economic
fundamentals and woul support growth by encouraging more
investment in infrastructure.
    Most analysts said the country's deteriorating current
account balance was the reason for the peso's decline. For the
first time in 15 years, the Philippines is expecting its 2017
current account balance to be in a deficit of $600 million.
    The following table shows rates for Asian currencies against
the dollar at 0554 GMT.
   Change on the                                
  day at   0554                       
  Currency         Latest   Previous    Pct Move
                      bid        day  
  Japan yen        111.55     111.72       +0.15
  Sing dlr         1.3518     1.3506       -0.09
  Taiwan dlr       30.191     30.172       -0.06
  Korean won       1137       1131.8       -0.42
  Baht             33.130      33.09       -0.12
  Peso             50.790      50.71       -0.16
  Rupiah           13365       13325       -0.30
  Rupee            65.34       65.10       -0.36
  Ringgit          4.206       4.202       -0.10
  Yuan             6.620      6.6189       -0.02
  Change so far                                 
 in 2017                              
  Currency         Latest  End 2016     Pct Move
  Japan yen        111.55     117.07       +4.95
  Sing dlr         1.3518     1.4490       +7.19
  Taiwan dlr       30.191     32.279       +6.92
  Korean won       1137      1207.70       +6.26
  Baht             33.130      35.80       +8.06
  Peso             50.790      49.72       -2.11
  Rupiah           13365       13470       +0.79
  Rupee            65.335      67.92       +3.96
  Ringgit          4.206      4.4845       +6.62
  Yuan             6.620      6.9467       +4.93
 (Reporting by Patturaja Murugaboopathy in Bengaluru; Editing by
Jacqueline Wong)
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