Asian FX subdued

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    The Philippine peso strengthened the most among its Asian peers on Monday, while most other units traded in a thin range as investors held positions amid reports that Washington may restrict US investments in Chinese firms.

    The Philippine peso strengthened 0.2 percent as investors cheered central bank measures on Friday to boost its slowing economy.

    Elsewhere, reports that Washington is considering delisting Chinese companies from US stock exchanges dampened sentiment.

    The news stoked fears of an escalation of US-China trade tensions ahead of talks expected to be held late next week after months of tit-for-tat moves by both sides.

    “Reports that the White House may be planning steps to restrict US investments in Chinese firms have once again caught markets off guard, igniting caution,” Vishnu Varathan, senior economist at Mizuho Bank said in a note.

    Firming oil prices also weighed on the currencies of net oil importers, with the Indian rupee and the Indonesian rupiah IDR=ID weakening 0.2 percent and 0.1 percent, respectively.

    Factory activity surveys in China pointed to slight improvement in September as domestic demand picked up, although export demand remained weak.

    The yuan was steady ahead of a week-long holiday. Chinese financial markets will be closed for the National Day holiday from Tuesday.

    The South Korean won firmed marginally with gains capped by weak August factory data. The country’s industrial output dropped 2.9 percent from the previous year, compared with a 0.2 percent decline predicted by a Reuters poll, while its service sector output rose 1.2 percent from the previous month.

    Financial markets in Taiwan were closed for a holiday.

    The peso firmed for a fourth consecutive session as policies to boost the economy helped investor sentiment.

    The country’s central bank announced a 100 basis points cut in banks’ reserve requirement ratio on Friday which will take effect in November.

    “The move was carefully telegraphed by the Governor and was warranted given the central bank’s latest inflation forecast showing price gains to average 2.5 percent for 2019,” an ING note said.

    The Bangko Sentral ng Pilipinas cut its benchmark interest rate for a third time this year last week and lowered its inflation forecast for 2019 to 2.5 percent from 2.6 percent. – Reuters