EM ASIA FX-Philippine peso dips before c.bank rate meeting; Fed, U.S. GDP caution grows
* BSP tightening views seen priced in to some degree
* Baht down on disappointing factory output data
* Won, Taiwan dollar firm on exporters
(Adds text, updates prices)
By Jongwoo Cheon
SINGAPORE, July 30 (Reuters) - The Philippine peso edged
down on Wednesday as investors took profits a day before a
monetary policy meeting, and as emerging Asia currencies in
general came under pressure from concerns that the U.S. Federal
Reserve may move to a hawkish policy stance.
The Philippine central bank is expected to tighten policy
for the fourth straight meeting on Thursday to tackle
inflationary pressures, by raising either its main overnight
borrowing rate or the rate of the rate on its special deposit
accounts (SDAs).
The peso eased as much as 0.2 percent to 43.46
per dollar, its weakest since July 21, as traders said
expectations of tightening have been priced in to some degree.
Dollar demand from local companies also hurt the Philippine
currency, traders said.
"That event has been mostly factored in," said a senior
Philippine bank trader in Manila.
"A minority camp said no hike, given expectations of weak Q2
growth. If that is correct, the market may be primed for
disappointment," said the trader, adding the peso may weaken to
test 43.70 in case of missing expectations.
The Philippine currency has been stronger than that level so
far this month.
The peso has risen about 1 percent since June 19 when the
central bank tightened policy for the third straight meeting by
raising the SDA rate in a bid to contain liquidity growth and
curb price pressures.
Despite Wednesday's dip, the peso is likely to strengthen if
the Bangko Sentral ng Pilipinas (BSP) raises the main rate
this week, analysts and traders said.
"After raising special deposit rate last month, the BSP is
poised to lift its benchmark rate," said Andy Ji, Asian currency
strategist for Commonwealth Bank of Australia in Singapore.
"Real interest rates are one of the lowest in the region
with inflation running uncomfortably high. A long overdue hike
will support the peso," Ji said, expecting the currency would
strengthen to 42.50 by year-end.
Still, analysts and traders doubted how much the peso would
appreciate further given caution over the Fed's eventual policy
rate hike.
The U.S. central bank is all but certain to cut its monthly
bond-buying programme by another $10 billion later in the day.
The focus has already shifted to when it will start to lift
interest rates, even though this week's meeting will conclude
with only a statement without a news conference.
The dollar stayed firm against a basket of major six
currencies on expectations of a strong second-quarter growth in
the U.S. economy and some hints on the Fed's rate policy.
"H2 will be difficult for Asian EM FX due to a firmer USD
tone in global markets and higher UST yields. The peso will be
one of the currencies facing headwinds," said Dariusz Kowalczyk,
a senior economist and strategist for Credit Agricole CIB in
Hong Kong.
RINGGIT
The Malaysian ringgit eased in thin trading as
traders covered dollar short positions before the outcome of the
Fed policy meeting.
A senior Malaysian bank trader said the ringgit may weaken
to 3.1900 per dollar on expectations of a hawkish stance by the
U.S. central bank.
Still, the trader said such depreciation could be a chance
to buy the ringgit on dips, expecting more fund inflows into
higher economic growth.
BAHT
The Thai baht dipped as factory output in June fell
more than expected, indicating the economy keeps struggling to
regain traction.
Bangkok shares fell 0.9 percent, underperforming
most of regional equity markets.
WON, TAIWAN DOLLAR
The South Korean won and the Taiwan dollar
rose on demand from exporters for month-end
settlements.
The won found further support as foreign investors continued
to buy Seoul shares.
The Singapore dollar also edged up on month-end
corporate demand and as the Chinese yuan turned
higher.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0445 GMT
Currency Latest bid Previous day Pct Move
Japan yen 102.08 102.12 +0.04
Sing dlr 1.2421 1.2429 +0.06
Taiwan dlr 29.944 30.005 +0.20
Korean won 1022.50 1024.40 +0.19
Baht 31.85 31.81 -0.13
Peso 43.40 43.36 -0.09
*Rupiah 11575.00 11575.00 +0.00
Rupee 60.17 60.13 -0.07
Ringgit 3.1790 3.1745 -0.14
Yuan 6.1780 6.1815 +0.06
Change so far in 2014
Currency Latest bid End prev year Pct Move
Japan yen 102.08 105.28 +3.13
Sing dlr 1.2421 1.2632 +1.70
Taiwan dlr 29.944 29.950 +0.02
Korean won 1022.50 1055.40 +3.22
Baht 31.85 32.86 +3.17
Peso 43.40 44.40 +2.29
Rupiah 11575.00 12160.00 +5.05
Rupee 60.17 61.80 +2.71
Ringgit 3.1790 3.2755 +3.04
Yuan 6.1780 6.0539 -2.01
* Financial markets in Indonesia are closed for holidays.
(Editing by Kim Coghill)