EM ASIA FX-Yellen's rate stance hits Asia FX, bonds; yuan at 8-year low
* PBOC sets midpoint weaker for 11th session
* Ringgit at 10-mth low; Malaysia c.bank says not capital
controls
* Philippine peso hits 2008 global financial crisis level
* Won near 5-month low; S.Korea intervention suspected
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, Nov 18 (Reuters) - Emerging Asian currencies and
bonds fell on Friday, extending their weekly slump as Federal
Reserve Chair Janet Yellen signalled an interest rate hike was
imminent, intensifying fears of capital flight from the region
to the United States.
The Chinese yuan hit an eight-year low as the
People's Bank of China set its daily guidance rate weaker for an
11th straight session, reflecting the dollar's strength.
Malaysia's ringgit touched a 10-month trough with
government bond prices down although the country's
central bank said the latest steps to support the currency were
not capital controls.
The Philippine peso fell to the lowest since
November 2008, the middle of the global financial crisis.
South Korea's won slid to its weakest in about
five months, although the foreign exchange authorities were
suspected of slowing down its weakness, traders said.
Earlier, a foreign exchange official described the
won's decline as a little excessive.
Yellen said on Thursday in Congressional testimony that the
election of Donald Trump as U.S. president has done nothing to
change the Fed's plan to raise interest rates "relatively soon".
The comments, along with solid economic data on the labour
market and inflation, pushed the dollar up to a
13-1/2-year peak against a basket of six major currencies.
U.S. Treasury yields also jumped.
"Yellen almost confirmed a December hike. At the same time,
she was more hawkish than before," said Jeong My-young, Samsung
Futures research head in Seoul, given her comments that U.S.
wages were rising and growth had accelerated over the second
half of the year.
"The U.S. economy is almost the only country whose economy
is growing and monetary policy differentials will be widened.
So, other currencies including Asian units have no choice but to
weaken against a strong dollar," Jeong added.
Money market futures priced in about a 90 percent chance of
a Fed tightening next month. They are also reflecting one or
more rate hikes next year, a sea change from before the U.S.
election when they priced in a less than 50 percent chance of a
2017 rate hike.
Emerging Asian currencies have been under severe pressure
from higher U.S. yields on expectations that Trump's policies
will push up inflation. The president-elect's protectionist
stance on trade also hurt the regional units, given Asia's heavy
reliance on exports.
RINGGIT, YUAN
The ringgit on Friday fell to 4.4090 per dollar, its weakest
since Jan. 18. The 10-year Malaysian government bond yield
rose to an 11-month high of 4.4349 percent as some
traders cited continuous liquidation by long-term foreign
investors.
The Malaysian currency led weekly losses in emerging Asia
with a 2.9 percent slump against the greenback so far this week.
That would be the largest weekly depreciation since late
September last year.
"A dangerous combination of extremes is likely amplifying
movements, as volatility expectations remain elevated, yet
liquidity is extremely weak," said Stephen Innes, senior FX
trader for FX broker OANDA in Singapore.
"The fire alarm is sounding and I expect a mad dash for the
exits if we break the critical support 4.40-42 levels."
Malaysia's central bank demanded foreign banks sign
commitments to stop trading the currency in offshore markets,
Reuters reported on Wednesday, a move the broader market views
as a form of capital controls.
Elsewhere in Asia, the yuan has lost 1.1 percent so far this
week, which would be the largest weekly depreciation since early
January when fears of capital outflows mounted and there were
increased expectations of further decline.
The Philippine peso was set to suffer the largest weekly
slump in more than three years, with a 1.6 percent slide so far
this week, as foreign investors dumped Manila shares.
The won has fallen 1.4 percent throughout the week as
foreigners pulled money out of South Korea's stocks and bonds.
Singapore's dollar has slid 0.9 percent so far this
week as disappointing October exports data raised risks of a
recession and the odds for monetary stimulus.
The Indian rupee has lost 1.2 percent for the week,
while the Indonesian rupiah was down 1.0 percent.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0445 GMT
Currency Latest bid Previous day Pct Move
Japan yen 110.61 110.11 -0.45
Sing dlr 1.4265 1.4210 -0.39
Taiwan dlr 31.998 31.868 -0.41
Korean won 1180.80 1175.90 -0.41
Baht 35.59 35.45 -0.39
Peso 49.760 49.560 -0.40
Rupiah 13420 13370 -0.37
Rupee 68.08 67.82 -0.39
Ringgit 4.4090 4.3900 -0.43
Yuan 6.8899 6.8720 -0.26
Change so far in 2016
Currency Latest bid End prev year Pct Move
Japan yen 110.61 120.30 +8.76
Sing dlr 1.4265 1.4177 -0.62
Taiwan dlr 31.998 33.066 +3.34
Korean won 1180.80 1172.50 -0.70
Baht 35.59 36.00 +1.15
Peso 49.76 47.06 -5.43
Rupiah 13420 13785 +2.72
Rupee 68.08 66.15 -2.83
Ringgit 4.4090 4.2935 -2.62
Yuan 6.8899 6.4936 -5.75
(Reporting by Jongwoo Cheon; Editing by Jacqueline Wong)
