September 25, 2018 / 5:37 AM / 24 days ago

EM ASIA FX-Most Asian currencies weaken on a firmer dollar ahead of likely Fed hike

    * Sino-U.S. trade tensions revive uncertainty in global
outlook
    * U.S. Fed expected to hike rates on Wednesday
    * Philippine, Indonesia, Taiwan c.banks to meet on Thursday 
    * Graphic: EM Asia FX rates in 2018 tmsnrt.rs/2CPp4pY

 (Updates with likely post-Fed pressure on emerging currencies)
    By Nikhil Nainan
    Sept 25 (Reuters) - Almost all Asian currencies struggled on
Tuesday as the dollar firmed ahead of an expected Federal
Reserve rate hike, while U.S.-China trade tensions continue to
cloud the global outlook.
    The Fed begins its two-day policy meeting later on Tuesday
where it is expected to raise interest rates for the eight time
since late 2015.
    Markets are also betting on another rate hike before
year-end, though the outlook for 2019 is less clear. The dollar
index against a basket of six major currencies
strengthened 0.2 percent to 94.341.
    Although the rate hike has been priced in by many, any tilt
in forward-looking commentary and policy hints from the Fed will
be closely watched, OCBC bank said in a note. 
    In a week where several regional central banks are widely
expected to raise rates, several emerging-Asia currencies are
coming under pressure, none more so than the Indonesian rupiah
 which weakened 0.3 percent to 14,910 per dollar.
    Bank Indonesia has raised its benchmark rate by 125 basis
points over four hikes, yet the currency has shed 9 percent
against the dollar so far this year. 
    "The rupiah remains vulnerable to external factors. This
possibly makes the rupiah the currency of choice to short amid
pressures such as the emerging market sell-off, U.S. interest
rate normalisation, U.S. economic out-performance and trade
tensions," OCBC added.
    Markets across the region have been under the gun over the
past few months due to the intensifying trade row between China
and the United States, while investors wager that most Asian
currencies will continue to come under pressure.

    The Philippine peso dropped 0.2 percent to 54.337 per
dollar on Tuesday, climbing to its lowest level since the end of
2005. 
    The Philippine central bank is expected to raise rates by
another 50 basis points on Thursday, a separate Reuters poll
showed, in order to curb inflation and support its struggling
currency.
    The Indian rupee, the region's worst performer,
slipped 0.3 percent to 72.815 a dollar.
    Rising oil prices piled pressure on the rupee, with Brent
above $81 dollars a barrel, a trend that does not bode well for
a country that imports roughly 80 percent of its oil needs.

    Markets in South Korea were closed for public holiday for a
second day and will reopen on Thursday. 
    
    SINGAPORE DOLLAR 
    The Singapore dollar wavered between positive and
negative territory, after inflation data on Monday came largely
in line with expectations.
    Though core inflation rose 1.9 percent, unchanged from July,
it was slightly lower than forecast for August, reducing
expectations that the Monetary Authority of Singapore (MAS) will
change its stance at an October policy meeting.
    "The August inflation data presents a temporary setback to
hawkish expectations," said OCBC, but it still expects inflation
to cross MAS's 2 percent year-on-year target range.
    ING said in a note that, "despite a modestly improved
outlook for headline inflation over the coming months, the
escalating trade war makes a change of the already slightly
tightening MAS monetary policy stance in October seem very
unlikely."
    
CURRENCIES VS U.S. DOLLAR
 Change on the day at 0428 GMT                          
 Currency                     Latest bid  Previous day  Pct Move
 Japan yen                    112.840     112.79        -0.04
 Sing dlr                     1.366       1.3656        -0.04
 Taiwan dlr                   30.668      30.716        +0.16
 Baht                         32.450      32.42         -0.09
 Peso                         54.337      54.215        -0.22
 Rupiah                       14910.000   14860         -0.34
 Rupee                        72.815      72.63         -0.25
 Ringgit                      4.133       4.127         -0.13
 Yuan                         6.863       6.8600        -0.04
                                                        
 Change so far in 2018                                  
 Currency                     Latest bid  End 2017      Pct Move
 Japan yen                    112.840     112.67        -0.15
 Sing dlr                     1.366       1.3373        -2.12
 Taiwan dlr                   30.668      29.848        -2.67
 Korean won                   1115.300    1070.50       -4.02
 Baht                         32.450      32.58         +0.40
 Peso                         54.337      49.977        -8.02
 Rupiah                       14910.000   13565         -9.02
 Rupee                        72.815      63.87         -12.28
 Ringgit                      4.133       4.0440        -2.14
 Yuan                         6.863       6.5069        -5.18
 
 (Reporting by Nikhil Kurian Nainan in Bengaluru
Editing by Eric Meijer)
  
 
 
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