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Asian currencies fall as rising U.S. bond yields support the dollar

Reuters 

By Nainan

(Reuters) - Asian currencies weakened on Tuesday with the South Korean won and Indonesian rupiah falling the most, as easing trade tensions helped shore up the dollar and push up U.S. bond yields.

The dollar index against a basket of six major currencies edged up 0.2 percent to 92.792 at 0502 GMT.

The U.S. 10-year bond yield had inched higher on Monday, as optimism over Donald Trump's pledge to aid China's helped assuage U.S.-trade frictions.

"It appears that momentum for earnest trade negotiations has been unlocked and we think this could be a positive for global market sentiment and the U.S. dollar for now," said in a note.

Indonesia's rupiah weakened to 14,030 a dollar. Its loss for the day increased slightly after Southeast Asia's largest economy reported that in April it had its biggest trade deficit in four years.

The data showed a trade deficit of $1.62 billion in April which conflicted with most estimates, including a poll, and was a departure from a $1.12 billion surplus in March.

The rupiah remains perched around two-and-a-half-year lows.

Thailand's baht fell 0.4 percent. The central will leave interest rates at a near record low on Wednesday, a poll showed.

The Philippine peso fell 0.4 percent to 52.677 to the dollar, its lowest level in nearly 12 years.

The South Korean won declined 0.7 percent, ahead of revised April trade data later in the day.

CHINESE YUAN

The Chinese yuan slipped to 6.349 a dollar, following a slew of economic data, which showed China's industrial output grew 7 percent in April, quicker than expected, while missed expectations.

maintained a cautionary tone on the recent trade discussion between the world's two largest economics, saying is "unlikely to meet U.S. demands on bilateral trade".

Caution was echoed by the U.S. Ambassador to Terry Branstad, who says the countries are still "very far apart" on resolving trade frictions.

INDIA'S RUPEE

The Indian rupee inched down to its lowest in over three months, following data that showed accelerated in April, with many economists expecting a more at June's policy meeting.

accelerated in April to 4.58 percent, after easing for three straight months, mainly driven by faster increases in and fuel prices.

The biggest risk Asia's third-largest economy faces is rising crude prices. meets 80 percent of its needs from imports.

An increase in prices of $10 a barrel could quicken inflation by about 1 percentage point and reduce economic growth by 0.2 to 0.3 percentage points, a told

(Reporting by Kurian Nainan in Bengaluru; Editing by Richard Borsuk)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 11:16 IST
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