EMERGING MARKETS-Taiwan dollar extends rally; most other Asian currencies strengthen

  • 2/8/2021
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* Graphic: World FX rates tmsnrt.rs/2RBWI5E * Taiwan"s stock and bond markets closed until Feb. 16 * Thai, Indian, and Indonesia equities gain more than 1% each By Shruti Sonal Feb 8 (Reuters) - The Taiwan dollar continued to rise sharply on Monday, despite the country"s central bank attempting to crackdown on speculation around the currency, while most other emerging Asian currencies also firmed against the U.S. dollar. The Taiwan dollar, the region"s best-performing currency in 2021 so far, strengthened more than 1.4% on Monday. Rising global demand for tech products from the island"s trade-dependent economy has propelled the currency to its strongest in more than 23 years, against the U.S. dollar. On Sunday, the country"s central bank said it had banned Deutsche Bank from trading Taiwan dollar deliverable and non-deliverable forwards and suspended it for two years from trading forex derivatives. "We can see an official push-back but the reality is that the flows are still very supportive of Taiwan dollar", said Mitul Kotecha, Senior EM Strategist at TD Securities. There will be a bit of a resistance, but it"s hard to see any reversal of gains in the currency, he said, adding that it is also less sensitive to U.S. dollar"s moves than peers in the region, such as the South Korean won. Aiding the currency further, data showed Taiwan"s January exports rose by 36.8% from last year, much higher than the 15% increase expected in a Reuters poll. Meanwhile, a weaker U.S. dollar helped the Thai baht , Indonesian rupiah and the Malaysian ringgit gain between 0.1% and 0.4%. The dollar index weakened against a basket of six major currencies, after falling 0.6% on Friday, as data at the end of last week showed the U.S. economy created fewer jobs than expected in January. However, analysts were cautious about the rally in emerging Asian currencies, despite the recent risk-on mood in markets. "Going forward, the dollar index will likely rebound along with the rising 10-year U.S. treasury yield, considering the U.S. economic recovery and Joe Biden"s coronavirus relief package", said Gao Qi, FX strategist for EM Asia at Scotiabank. "It means we could see the dollar"s divergent performance versus EM Asian currencies including the CNY, CNH and INR in the coming weeks", he added. Most shares in the region climbed, tracking broader gains in global equities, on hopes that a $1.9 trillion COVID-19 aid package will be passed by U.S. lawmakers soon. Thailand, India, Singapore and Indonesia added about 1% each. Volumes remained low ahead of the Lunar New Year holiday in most markets. Taiwan"s stock and bond markets are closed starting Monday until Feb. 16, while Chinese financial markets will be closed for a week starting Feb. 11. Highlights: ** EXCLUSIVE-Buyers shun major Malaysian palm oil producers after forced labour allegations ** Top gainers on the Singapore STI include Singapore Airlines Ltd, SATS Ltd, DBS Group Holdings Ltd ** Thailand"s 10-year government bond yields are up 5 basis points at 1.32% Asia stock indexes and currencies at 0814 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY YTD % DAILY YTD % % % Japan -0.12 -2.13 <.N22 2.12 7.08 5> China C> India +0.08 +0.28 <.NSE 1.29 8.12 I> Indones +0.18 +0.32 <.JKS 0.93 3.84 ia E> Malaysi +0.14 -1.05 <.KLS -0.12 -3.11 a E> Philipp +0.00 -0.06 <.PSI 0.08 -1.61 ines > S.Korea 1> Singapo +0.02 -0.98 <.STI 0.98 3.23 re > Taiwan +0.00 +0.33 <.TWI - 7.26 I> Thailan +0.10 -0.23 <.SET 1.18 4.48 d I> (Reporting by Shruti Sonal in Bengaluru; editing by Uttaresh.V)

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