* India's rupee drops ahead of expected rate cut
* Philippines to cut rates by 25 bps - DBS
* Safe-havens gain as broader sentiment remains week
(Adds text, updates prices)
By Nikhil Nainan
Aug 7 (Reuters) - Asian currencies remained on the back foot
on Wednesday as the yuan continued to weaken despite signs
Chinese authorities were stepping in to limit the losses.
Global investors are on edge over whether a sudden slide in
the yuan to 11-year lows will turn into the next front in the
deepening U.S.-China trade war, engulfing other currencies.
China let the yuan CNY=CFXS break through the key 7 per
dollar level on Monday amid growing U.S. tariff pressure,
jolting international markets. But there were some signs on
Tuesday that Chinese authorities were trying to stabilise the
currency before depreciation expectations grow too strong.
China's state banks have been active in the onshore yuan
forwards market this week, using swaps to tighten dollar supply
and support the Chinese currency, four sources with knowledge of
the matter told Reuters. While the moves helped soothe nerves across markets,
investors remain wary of how much more Beijing will allow the
currency to soften. The yuan slipped a further 0.3% to 7.047 per
dollar on Wednesday.
"The USDCNY fix was curiously just below the 7-handle,
suggesting that the bait is still there for US Treasury to take
(to intervene or jawbone the USD lower)," Maybank said in a
note.
After labelling China a currency manipulator earlier this
week following the yuan's sudden slide, U.S. President Donald
Trump on Tuesday dismissed fears of a protracted trade war. But
any remaining market hopes of a near-term resolution to the
dispute are dimming rapidly after events of the past week.
South Korea's won KRW=KFTC and Taiwan's dollar TWD=TP
wavered for much of the day, while the Philippine peso PHP=
weakened 0.4%.
The Philippine central bank will decide rates on Thursday,
with DBS predicting a 25 basis point cut and another 25 bps cut
later this year.
Elsewhere, ahead of the Indian central bank meeting later in
the day, the rupee INR=IN dropped 0.2% against the dollar to
70.94.
The Reserve Bank of India is widely expected to cut rates
for the fourth meeting in a row as it seeks to battle sluggish
growth, though some analysts do not see a pressing need for more
easing right now.
"We do not see a compelling case for the RBI to engage in a
fourth rate cut to lower the repo rate," Vishnu Varathan, a
senior economist with Mizuho, wrote in a note.
A Reuters poll showed that analysts expect the rupee to
recoup this year's losses over the coming 12 months.
The Thai central bank was also set to meet later in the day
to decide rates. It is expected to stand pat, and the baht
THB=TH , Asia's best performer this year, was largely unchanged
in morning trade.
At times of heightened uncertainty, money tends to flow to
assets with safe-haven appeal, like gold or bonds. Gold prices
jumped 1% earlier in Asian-trade while the Japanese yen JPY= ,
also considered a safe play, strengthened 0.4%.
Risk sentiment took a further hit after the Reserve Bank of
New Zealand stunned traders by cutting its interest rates more
than expected, highlighting the growing concern policymakers
have about the global economy. "Risk-reward at this juncture may be to remain passively
positioned for further unravelling of investor sentiment," said
OCBC in a note.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0502 GMT
Currency Latest bid Previous day Pct Move
Japan yen 106.100 106.47 +0.35
Sing dlr 1.384 1.3814 -0.17
Taiwan dlr 31.481 31.510 +0.09
Korean won 1215.500 1215.3 -0.02
Baht 30.760 30.75 -0.03
Peso 52.260 52.04 -0.42
Rupiah 14275.000 14260 -0.11
Rupee 70.940 70.81 -0.18
Ringgit 4.194 4.19 -0.10
Yuan 7.047 7.0250 -0.31
Change so far in 2019
Currency Latest bid End 2018 Pct Move
Japan yen 106.100 109.56 +3.26
Sing dlr 1.384 1.3627 -1.52
Taiwan dlr 31.481 30.733 -2.38
Korean won 1215.500 1115.70 -8.21
Baht 30.760 32.55 +5.82
Peso 52.260 52.47 +0.40
Rupiah 14275.000 14375 +0.70
Rupee 70.940 69.77 -1.65
Ringgit 4.194 4.1300 -1.53
Yuan 7.047 6.8730 -2.46