* PBOC fixes midpoint higher; yuan intervention spotted
* Little conviction on further stabilisation yet
* Yuan to see worst week since Aug devaluation
* Won leads weekly Asia FX losses
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Jan 8 (Reuters) – Emerging Asian currencies on
Friday rebounded as China tried to calm financial markets again,
while regional units were set to suffer weekly losses on
uncertainties over Beijing’s stance on the renminbi’s weakness.
China’s central bank set its daily yuan guidance rate
firmer, for the first time in nine sessions, helping
onshore renminbi open sharply higher. That
supported other emerging Asian currencies such as the Malaysian
ringgit and the South Korean won.
The People’s Bank of China was also spotted intervening
through state-run lenders to support the currency, traders said.
The central bank was on Thursday suspected of bolstering
offshore yuan after it hit a record low of 6.7600 per
dollar.
Foreign exchange regulator has ordered banks in some of the
country’s major import and export centres to limit purchases of
dollars this month, three people with direct knowledge said on
Friday, in the latest attempt to stem capital outflows.
China’s major stock indexes rose after Beijing ditched a
circuit breaker mechanism that halted trading twice this week
and had been blamed for making market sell-offs worse.
“This is only a lull,” said Emmanuel Ng, a foreign exchange
strategist with OCBC Bank, referring to a stronger yuan midpoint
fixing on Friday.
“We expect a resumption of upside surprises in the USD/CNY
midpoints if broad dollar strength regains traction and data
points more economic slowdown,” Ng said.
Emerging Asian currencies are likely to weaken as they react
more significantly to yuan, he added.
Bearish bets on the renminbi hit a near six-year high,
denting sentiment towards most other regional units, a Reuters
poll of fund managers, currency traders and analysts showed on
Thursday.
DANCING WITH YUAN
Onshore yuan on Friday initially rose as much as 0.4
percent, helping its regional peers rebound.
But the Chinese currency gave up most of the gains, cutting
rises in other emerging Asian units. The Singapore dollar
turned weaker.
The renminbi has slid 1.4 percent against the dollar so far
this week, which would be its largest weekly loss since
mid-August in 2015 when China surprisingly devalued the
currency.
On Thursday, China allowed the biggest fall in the yuan in
five months, pressurising other emerging Asian currencies amid
fears that the move would trigger competitive devaluation.
The won was the worst-performing regional unit with a 2.1
percent slide as North Korea’s nuclear test on Wednesday boosted
geopolitical tensions in the peninsula. In retaliation, South
Korea unleashed a high-decibel propaganda barrage across its
border with the North.
The South Korean unit is seen weakening further, not because
of the tensions, but because of a slowing China’s economy and
uncertainty over the yuan, traders said.
“We need to open the door for the yuan’s further weakness on
PBOC’s softer fixing again. That will put more pressure on the
won, causing more selling from offshore names,” said a foreign
bank currency trader in Seoul.
The trader said offshore funds, especially macro accounts,
sold the won and some long-term foreign investors unloaded the
unit around 1,200 per dollar.
The ringgit has fallen 2.0 percent so far this week as
sliding crude prices added to concerns over Malaysia’s falling
oil and gas revenues. The country’s exports in November rose
less than expected.
Singapore’s dollar has lost 1.1 percent throughout this
week, while the Indian rupee has slumped 0.8 percent.
The Taiwan dollar has fallen 0.7 percent for the
week.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0605 GMT
Currency Latest bid Previous day Pct Move
Japan yen 118.26 117.68 -0.49
Sing dlr 1.4341 1.4328 -0.09
Taiwan dlr 33.308 33.530 +0.67
Korean won 1198.00 1200.60 +0.22
Baht 36.21 36.28 +0.19
Peso 47.01 47.03 +0.04
Rupiah 13875.00 13925.00 +0.36
Rupee 66.66 66.93 +0.41
Ringgit 4.3780 4.3935 +0.35
Yuan 6.5884 6.5929 +0.07
Change so far in 2016
Currency Latest bid End prev year Pct Move
Japan yen 118.26 120.30 +1.73
Sing dlr 1.4341 1.4177 -1.14
Taiwan dlr 33.308 33.066 -0.73
Korean won 1198.00 1172.50 -2.13
Baht 36.21 36.00 -0.58
Peso 47.01 47.06 +0.11
Rupiah 13875.00 13785.00 -0.65
Rupee 66.66 66.15 -0.77
Ringgit 4.3780 4.2935 -1.93
Yuan 6.5884 6.4936 -1.44
(Additional reporting by Yena Park in SEOUL; Editing by
Gopakumar Warrier)
