EM ASIA FX-Most Asian FX up slightly, but set for weekly losses on recession fears

By Aby Jose Koilparambil

* MOst currencies up slightly, but still down on week * Philippine peso strengthens up to 0.6% * Malaysian cenbank announces liberalisation of FEA policy * (Adds text, updates prices) By Aby Jose Koilparambil Aug 16 (Reuters) - Most Asian currencies rose modestly on Friday as anxiety over a global recession eased a little, thanks to strong U.S. retail sales data, though that couldn't prevent weekly losses as riskier assets barely recovered from a hefty sell-off. U.S. stocks bounced overnight and supported some of the Asian bourses after data showed American consumers continued to splurge in July. Overall confidence in financial markets remained fragile, even though signs China might offer more stimulus to support its economy appeared to calm nerves. Risk sentiment worsened midweek as an inversion in the U.S. Treasury yield curve raised fears of a recession there, with several major economies including China and Germany already under the pump. That explains the limited gains for regional currencies on the day as Sino-U.S. trade tensions remained high, even after Washington delayed tariffs on some Chinese imports earlier in the week. Beijing has also vowed to retaliate with more duties on U.S. imports a day after President Donald Trump linked peaceful handling of Hong Kong civil unrest to a trade deal with China. "There is pressure on Asian currencies given this environment where we have negative news on the trade front alongside poor Asia data, and for these currencies to gain ground, we need to have some real improvement in U.S.-China trade developments," said Irene Cheung, senior Asia strategist at ANZ Banking Group (Singapore). The Philippine peso rose 0.6%, while the Indonesian rupiah strengthened as much as 0.3%, but both currencies were poised for weekly losses of 0.8% and 0.3%, respectively. The Singapore dollar and the Taiwan dollar gained up to 0.2% each, and the two were also set to post slight weekly losses. The Indian rupee and the South Korean won gained slightly, while the Chinese yuan edged lower. MALAYSIAN RINGITT The Malaysian ringgit rose 0.4% and is set to post 0.2% gain for the week The Malaysian central bank announced further liberalisation of its foreign exchange administration (FEA) policy, saying it would provide businesses with greater flexibility in managing their foreign exchange risks and daily operations. The measures do not take effect until the end of August, and there was no reaction in the thinly traded onshore ringgit . But offshore non-deliverable forwards, which most overseas investors use to hedge risks, saw the value of ringgit in forwards rise in anticipation of less pressure in the offshore segment. The one-year NDFs fell to 4.955 per dollar from Thursday's highs of 4.2655 per dollar. The spot ringgit is expected to weaken when the measures take effect on Aug. 30, in anticipation that more hedging of foreigners' ringgit liabilities will move onshore. The measures come in the wake of FTSE Russel's review, announced in April, of Malaysia's market accessibility level in its World Government Bond Index due to concerns about liquidity. Earlier in the day, data showed Malaysia's economy grew faster-than-expected in April-June, making it the first Southeast Asian nation to report an acceleration in growth from the previous quarter, driven by stronger consumer spending and palm oil production. CURRENCIES VS U.S. DOLLAR Change on the day at 0605 GMT Currency Latest bid Previous day Pct Move Japan yen 106.070 106.11 +0.04 Sing dlr 1.386 1.3888 +0.17 Taiwan dlr 31.348 31.405 +0.18 Korean won 1210.700 1212.7 +0.17 Baht 30.900 30.86 -0.13 Peso 52.430 52.763 +0.64 Rupiah 14225.000 14260 +0.25 Rupee 71.233 71.27 +0.05 Ringgit 4.176 4.192 +0.38 Yuan 7.037 7.0333 -0.06 Change so far in 2019 Currency Latest bid End 2018 Pct Move Japan yen 106.070 109.56 +3.29 Sing dlr 1.386 1.3627 -1.71 Taiwan dlr 31.348 30.733 -1.96 Korean won 1210.700 1115.70 -7.85 Baht 30.900 32.55 +5.34 Peso 52.430 52.47 +0.08 Rupiah 14225.000 14375 +1.05 Rupee 71.233 69.77 -2.05 Ringgit 4.176 4.1300 -1.10 Yuan 7.037 6.8730 -2.34 (Reporting by Aby Jose Koilparambil in Bengaluru)