Most Asian currencies weaken as appetites for risk dented

Philippine's peso dips 0.3 per cent to 52.381 to the US dollar. — Reuters pic
Philippine's peso dips 0.3 per cent to 52.381 to the US dollar. — Reuters pic

SINGAPORE, May 23 — Most emerging Asian currencies weakened today as investors trimmed exposure to riskier assets and the US dollar edged higher, while the South Korean won climbed a day before a central bank decision in Seoul.

Investors sought safer assets after US President Donald Trump said there was a “substantial chance” his summit with North Korean leader Kim Jong Un would not take place as planned on June 12.

Trump also tempered optimism over progress made in trade talks between the US and China, saying he was not pleased with recent trade talks.

“Most funds go into less risky assets like the yen,” said Manny Cruz, an analyst with Asiasec Equities in Manila. “One of the reasons for this is the optimism over the US-China trade talks has started to dissipate.”

The US dollar's gain comes ahead of the release later today of minutes of the latest Federal Reserves policy meeting.

“Markets are likely to scrutinise for hints of a tighter Federal Reserve. Disappointment here could continue to slow the pace of yield increases,” said Christopher Wong, a FX strategist with Maybank.

Today, the ringgit slipped 0.2 per cent to 3.973 to the US dollar.

April's annual consumer inflation rate was 1.4 per cent, but below expectations of 1.6 per cent.

The Singapore dollar weakened to 1.342 against the greenback. Singapore's April's headline consumer price index also rose less than expected.

Philippine's peso dipped 0.3 per cent to 52.381 to the US dollar.

The Philippines reported a budget surplus of 46.3 billion pesos (RM3.3 billion) in April, helping to narrow its deficit in the first four months of 2018. But the April surplus was 12 per cent smaller than it was one year earlier.

Meanwhile, oil prices remain stubbornly close to US$80 (RM318) a barrel, a concerning development for oil-importing nations, as this could drive up inflation and widen trade deficits.

Indonesia's rupiah slipped 0.4 per cent to 14,190. The government yesterday said it will raise subsidies to protect the public from soaring global oil prices.

The Indian rupee weakened to 68.188 to the US dollar, its lowest since January 2017.

“Higher oil prices and US Treasury yields may continue to undermine the rupee, rupiah and peso as they are net oil importers and suffer from twin deficits of fiscal budget and current account,” Wong of Maybank said.

South korean won

South Korea's won strengthened 0.7 per cent to 1078.4 to the dollar, even though the country's central bank is not expected to change rates at Thursday's policy meeting, according to a Reuters poll.

However, poll results noted that the voting might not be unanimous, potentially setting the framework for a rate hike in July.

“Widening rate differential with the Fed may be a cause to hike, but we think this should come later in the year,” OCBC Treasury Research said in a note. — Reuters

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