* Indonesian rupiah leads gains in catch-up trade
* Chinese yuan at weakest level in over 6 months
* Philippine peso leads intraday losses
(Adds text, updates prices)
By Ambar Warrick
June 10 (Reuters) - The Indonesian rupiah rose in catch-up
trade while most Asian currencies edged lower on Monday, after
the United States called off trade tariffs on Mexico, prompting
markets to scale back expectations of an imminent rate cut by
the Federal Reserve.
Most regional equity markets rose after Mexico agreed to
take strong measures to curb illegal immigration, as the
prospect of another trade war had prompted heavy selling over
the past week. The U.S. dollar .DXY was up about 0.3%.
Markets had priced in slightly more than a 50% probability
that rates would be cut 25 basis points by the end of July and
one more cut would follow by the end of the year, according to
the CME Group's FedWatch Tool. Weaker U.S. employment data on Friday had also raised
expectations for an interest rate cut. Policy easing by the Fed
would drive capital flows to regional markets on the prospect of
better yields.
"It sort of diminished the urgency for the Fed to move on
the rate cut because you price out the downside risk with
regards to the tariffs. From that perspective, it seems that
some of the dollar selling on the back of lower U.S. rates could
be unwound this week," said Chang Wei Liang, forex strategist at
Mizuho Bank.
Sentiment was rattled early in the Asian trading day after
Chinese imports in May slid a worse-than-expected 8.5% from a
year earlier, pointing to weakening demand from the world's
second-largest economy. Exports saw a surprise return to growth
although analysts said this could be due to front-loading by
exporters to avoid higher U.S. tariffs. The Chinese yuan CNY=CFXS was among the biggest losers for
the day, shedding about 0.3% to the dollar. Increased trade
tensions have battered the currency, which traded at its weakest
level in more than six months.
"We don't see too much of a relief rebound partly because
U.S. policy capriciousness has become a lot more damaging to
market sentiment," Chang added.
A Reuters poll last week found that market participants were
broadly bearish on most Asian currencies as the U.S.-China trade
conflict showed no signs of abating. Investors will now look to
any developments at a G20 leaders' summit late this
month. The South Korean won KRW=KFTC shed about 0.2%, while the
Philippine peso PHP= dropped 0.4%. Most other regional units
traded in a flat-to-low range.
RUPIAH GAINS
The Indonesian rupiah IDR=ID led gains, rising about 0.32%
to the dollar after markets were closed last week for the Eid
al-Fitr holidays.
Inflation in Southeast Asia's largest economy accelerated
more than expected in May, cooling expectations for fiscal
policy easing in the country, given that the figure was well
within Bank Indonesia's target. Mizuho's Chang said that the country may be more insulated
to global trade headwinds than its peers due to its reliance on
domestic demand, rather than exports.
Chang also noted that the continuance of economic reform
policies would spur interest in the country, after incumbent
President Joko Widodo retained power.
The following table shows rates for Asian currencies against
the dollar on Monday.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0415 GMT
Currency Latest bid Previous day Pct Move
Japan yen 108.570 108.18 -0.36
Sing dlr 1.366 1.3622 -0.26
Taiwan dlr 31.414 31.402 -0.04
Korean won 1183.800 1181.4 -0.20
Baht 31.370 31.35 -0.06
Peso 52.110 51.9 -0.40
Rupiah 14225.000 14270 +0.32
Rupee 69.465 69.47 +0.01
Ringgit 4.162 4.157 -0.12
Yuan 6.934 6.9118 -0.32
Change so far in 2019
Currency Latest bid End 2018 Pct Move
Japan yen 108.570 109.56 +0.91
Sing dlr 1.366 1.3627 -0.22
Taiwan dlr 31.414 30.733 -2.17
Korean won 1183.800 1115.70 -5.75
Baht 31.370 32.55 +3.76
Peso 52.110 52.47 +0.69
Rupiah 14225.000 14375 +1.05
Rupee 69.465 69.77 +0.44
Ringgit 4.162 4.1300 -0.77
Yuan 6.934 6.8730 -0.88