Asian cur­ren­cies re­cover af­ter yuan-cut rout

The China Post - - BUSINESS INDEX & -

Asian cur­ren­cies gained Thurs­day, re­cov­er­ing from the worst two- day rout in al­most 20 years af­ter main­land China re­as­sured mar­kets it would not en­gage in a cur­rency war.

Emerg­ing mar­ket cur­ren­cies in­clud­ing the In­done­sian ru­piah, Philip­pine peso and South Korean won rose slightly against the U. S. dol­lar af­ter main­land China Thurs­day de­val­ued the yuan by 1.1 per­cent.

The cut, which was smaller than those in the pre­vi­ous two days, and news the cen­tral bank in­ter­vened to sta­bi­lize the yuan on Wed­nes­day re­as­sured deal­ers Bei­jing would not al­low its cur­rency to slump.

“It’s likely the worst is over,” Pa­trick Ben­nett, a strate­gist at Cana­dian Im­pe­rial Bank of Com­merce in Hong Kong, told Bloomberg News.

“PBoC ( Peo­ple’s Bank of China) in­ter­ven­tion has calmed the mar­ket. There is not a sense that the on­shore yuan will weaken for­ever.”

In Tokyo late af­ter­noon trade the U. S. dol­lar changed hands at 124.49 yen, up from 124.24 yen in New York, where it took a hit on fears Bei­jing’s moves un­der­scored weak­ness in main­land China’s econ­omy and could de­lay a U. S. in­ter­est rate hike.

Main­land China’s latest de­val­u­a­tion comes af­ter the two pre­vi­ous cuts, on Tues­day and Wed­nes­day, sparked con­cerns that the world’s No. 2 econ­omy is weaker than pre­vi­ously thought.

The move sent Asia- Pa­cific cur­ren­cies plum­met­ing, push­ing the Malaysian ring­git to 17- year lows, on fears the cut could hurt other re­gional economies and spark a race to the bot­tom by cen­tral banks in a bid to keep their ex­ports com­pet­i­tive.

On Wed­nes­day, Viet­nam dou­bled the trad­ing band for the dong, al­low­ing the cur­rency to weaken to try to make ex­ports more com­pet­i­tive as main­land China falls.

In other trad­ing, the euro changed hands at US$ 1.1122 and 138.46 yen, weaker than US$ 1.1159 and 138.63 yen in New York.

Traders are keep­ing an eye out for U. S.

re­tail sales data later this week, with up­beat re­sults likely to boost spec­u­la­tion the Fed­eral Re­serve could lift rates this year. A rate rise is a plus for the U. S. dol­lar.

The U. S. dol­lar eased against most Asia- Pa­cific cur­ren­cies, slid­ing to SG$ 1.3971 from SG$ 1.4135 on Wed­nes­day, to 13,766 In­done­sian ru­piah from to 13,825 ru­piah, and to 35.18 Thai baht from 35.55 baht.

It also weak­ened to 46.18 Philip­pine pe­sos from 46.33 pe­sos, and to 1,174.55 South Korean won from 1,189.75 won.

The Aus­tralian dol­lar firmed to 73.59 U. S. cents from 72.62 U. S. cents on Tues­day, while the Chi­nese yuan fetched 19.39 yen against 19.47 yen.

An­a­lysts warned, how­ever, that Asia- Pa­cific cur­ren­cies are still at risk af­ter suf­fer­ing their worst two- day sell­off since 1998.

“The talk of China join­ing a cur­rency war could set out a round of com­pet­i­tive val­u­a­tion in the re­gion,” said Ai­dan Yao, se­nior emerg­ing mar­ket economist at AXA In­vest­ment Man­agers.

AFP

For­eign na­tion­als walk past a wall dis­play­ing a for­eign cur­rency ex­change ad­ver­tise­ment in In­dia’s fi­nan­cial cap­i­tal Mum­bai on Thurs­day, Aug. 13. Asian cur­ren­cies gained, re­cov­er­ing from the worst two-day rout in al­most 20 years af­ter China re­as­sured mar­kets it would not en­gage in a cur­rency war.

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