* Offshore yuan hovers near record low
* Sino-U.S. tensions keep USD in demand
* S.Korea flags worst year for economy since 1998
(Adds text, updates prices)
By Shriya Ramakrishnan
May 28 (Reuters) - The South Korean won weakened on Thursday
after the central bank cut its policy rate to a record low and
downgraded 2020 growth forecast, while most other Asian
currencies also slipped as Sino-U.S. tensions over Hong Kong
escalated.
The won KRW=KFTC led declines in the region, falling as
much as 0.7% to 1,242.50 per dollar, its worst intraday
performance in more than three weeks.
The Bank of Korea cut its benchmark interest rate by a
quarter of a percentage point to 0.5% as it warned the
coronavirus pandemic would be worse for Asia's fourth-largest
economy than the 2008 global financial crisis. The central bank also downgraded its 2020 economic
projection to a 0.2% decline from a 2.1% growth forecast in
February, which would be the biggest contraction since 1998.
Asian currencies came under pressure as a rift between the
world's two top economies worsened. U.S. Secretary of State Mike
Pompeo said on Wednesday Hong Kong no longer qualified for its
special status under U.S. law. China's parliament is expected to approve on Thursday a
proposed security law that would reduce Hong Kong's separate
legal status.
The Chinese yuan CNY=CFXS was little changed at 7.166 per
dollar in onshore trade, while its offshore counterpart CNH=D3
hovered close to a record low of 7.1966 struck overnight.
"Traders are looking for the easiest and cleanest hedge to
cover the rise in U.S.-China tensions and ultimately trade war
risk," said Stephen Innes, chief global markets strategist at
AxiCorp. "Staying short on the bellwether CNH fits that need to
a tee."
The Philippine peso PHP= dropped 0.2%, while the Singapore
dollar SGD= largely wavered. The Malaysian ringgit MYR=MY
and the Indian rupee INR=IN eased 0.2% and 0.1%, respectively.
INDONESIAN RUPIAH
The Indonesian rupiah IDR= weakened 0.4%, in line with its
peers.
Indonesia expects to raise $67 billion from bonds and loans
in the remainder of the year to fund its swelling budget
deficit, the finance ministry's head of risk and financing
department said on Wednesday. "With global investors facing a dearth of positive-yielding
assets, Indonesian bonds could lure more inbound capital flows,
which could translate into support for the rupiah," said Han
Tan, a market analyst at FXTM.
Investors are also being compelled to be more tolerant of
widening fiscal deficits, as governments worldwide shore up
financing to cushion the economic blow from the pandemic, Tan
said.
A Reuters poll showed investors turned bullish on the
currency for the first time since the end of February.
VS U.S. DOLLAR
Change on the day at
0510 GMT
Currency Latest Previous Pct
bid day Move
Japan yen 107.800 107.71 -0.08
Sing dlr 1.421 1.4200 -0.08
Taiwan dlr 30.028 30.030 +0.01
Korean won 1241.800 1234.4 -0.60
Baht 31.870 31.85 -0.06
Peso 50.735 50.64 -0.19
Rupiah 14735.000 14670 -0.44
Rupee 75.815 75.72 -0.13
Ringgit 4.355 4.348 -0.16
Yuan 7.166 7.1680 +0.03
Change so far in 2020
Currency Latest End 2019 Pct
bid Move
Japan yen 107.800 108.61 +0.75
Sing dlr 1.421 1.3444 -5.40
Taiwan dlr 30.028 30.106 +0.26
Korean won 1241.800 1156.40 -6.88
Baht 31.870 29.91 -6.15
Peso 50.735 50.65 -0.17
Rupiah 14735.000 13880 -5.80
Rupee 75.815 71.38 -5.85
Ringgit 4.355 4.0890 -6.11
Yuan 7.166 6.9632 -2.83