* Oil prices plunge about 30%
* Malaysian ringgit drops to mark worst day in two-weeks
* Yuan expected to outperform the basket in 2020 - HSBC
analyst
(Adds text, updates prices)
By Anushka Trivedi
March 9 (Reuters) - Asian currencies weakened on Monday as
investors sold off risky assets after a plunge in oil prices
exacerbated concerns over economic fallout stemming from the
coronavirus epidemic.
Saudi Arabia's decision to slash average selling prices and
ramp up crude production after Russia backed away from making
output cuts sent shockwaves through the markets and is likely to
weigh on regional currencies, since the majority of them are net
oil importers. O/R
Meanwhile, the number of coronavirus cases globally surged
past 107,000 as the outbreak spread to more countries. Italy
took drastic measures and sealed off large parts of the
prosperous north of the country, including financial capital
Milan. Panicked investors sought safer bets and pushed the Japanese
yen JPY= up 3% against the dollar to a three-year high and the
euro EUR= to a two-year peak. FRX/
U.S. 30-year treasury yields US30YT=RR sank below 1% and
10-year yields US10YT=RR under 0.5%, eroding the dollar's
chief attraction as the markets upped their bets for further
rate cuts by the Federal Reserve to mitigate the economic
damage.
The Fed's move is expected to spill over to Asia, with
Morgan Stanley analysts expecting that "the majority of emerging
market central banks will also cut rates further, taking global
monetary policy rates to a new all-time low."
Malaysia, and oil importing nation Indonesia, saw their
currencies lose nearly 1% against the dollar, while their
respective stock markets also hit multi-year lows. .SO
The rupiah IDR= was on track to slide for a third straight
session and Indonesia's 10-year government bond yield
ID10YT=RR rose slightly. The Malaysian ringgit MYR= dropped 0.9% and was on its way
to mark a worst session in two-weeks. The country's new prime
minister is due to announce his new cabinet later on Monday, a
week after he was appointed amid a political tussle.
The South Korean won KRW=KFTC weakened as much as 1.3% to
1,207.20 against the dollar, prompting its finance ministry to
issue a verbal warning against disorderly currency market
movement. India, the world's third-biggest oil importer, saw its
currency INR=IN decline 0.3%, while the Singapore dollar
SGD= gave up about 0.5%.
The Chinese yuan CNY=CFXS pared early gains to trade 0.1%
lower after reporting a larger than expected plunge in exports
over the weekend. However, analysts at HSBC see the yuan benefiting from a dip
in oil prices as nearly a quarter of its imports are
commodity-related.
China's monetary policy will be closely watched, which has
so far lagged the Fed's, and resulted in a record yield
differential that is likely to support foreign inflows to its
bond market, HSBC added.
"We believe the yuan will outperform the basket this year."
CURRENCIES VS U.S. DOLLAR AS AT 0518 GMT
Currency Latest bid Previous day Pct
Move
Japan yen 102.560 105.3 +2.67
Sing dlr 1.385 1.3781 -0.46
Taiwan dlr 30.077 30.040 -0.12
Korean won 1205.300 1192.3 -1.08
Baht 31.530 31.41 -0.38
Peso 50.625 50.54 -0.17
Rupiah 14350.000 14220 -0.91
Rupee 73.975 73.73 -0.34
Ringgit 4.208 4.17 -0.90
Yuan 6.943 6.9342 -0.12
Change so far in 2020
Currency Latest bid End 2019 Pct
Move
Japan yen 102.560 108.61 +5.90
Sing dlr 1.385 1.3444 -2.90
Taiwan dlr 30.077 30.106 +0.10
Korean won 1205.300 1156.40 -4.06
Baht 31.530 29.91 -5.14
Peso 50.625 50.65 +0.05
Rupiah 14350.000 13880 -3.28
Rupee 73.975 71.38 -3.51
Ringgit 4.208 4.0890 -2.83
Yuan 6.943 6.9632 +0.29