Asian FX up

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    Concessions by Beijing and Washington before planned talks aimed at defusing their bitter trade dispute on Thursday sparked a rally among Asian currencies, with that of export-dependent Taiwan leading the gains.

    Others that had solid advances were the onshore yuan – which reached its strongest level in nearly two months – the baht and the rupee.

    US President Donald Trump agreed to delay an additional increase in tariffs on Chinese goods by two weeks at the request of Chinese Vice Premier Liu He “as a gesture of good will.”

    The move, which supported broader risk appetites, came a day after China extended an olive branch by announcing exemptions for 16 types of US products from import tariffs.

    Stephen Innes, Asia-Pacific market strategist at AxiTrader, said in a client note that Trump’s move to delay the tariff increase indicates “he too is willing to negotiate to put an end to this trade war spat”.

    The Taiwan dollar advanced as much as 0.7 percent against the greenback.

    Any easing in tensions between the world’s two largest economies would benefit Taiwan’s trade-reliant economy, whose manufacturers have suffered from trade war disruptions and sluggish global demand for hi-tech gadgets like smartphones.

    Taiwan’s finance ministry had flagged a gradual stabilization in exports in the coming months, helped by the peak year-end season for gadgets and by more factories moving production back home from China amid the trade war.

    The baht, emerging Asia’s top performing currency this year and the rupee both appreciated 0.4 percent.

    Markets await the release of inflation and industrial production figures for India later in the day, with a Reuters poll predicting retail inflation to rise to a 10-month high in August driven by higher food prices.

    The Singapore dollar, which is also highly sensitive to trade developments, rose 0.2 percent.

    The Malaysian ringgit traded 0.2 percent higher to the dollar before a monetary policy decision later in the day.

    A Reuters poll predicted a hold, but some economists predicted a rate cut.

    “It largely boils down to whether Bank Negara Malaysia will act pre-emptively again in order to cushion further downside risks as limited fiscal space means that monetary policy will have to do most of the heavy-lifting,” said Mizuho Bank, which saw a 60 percent chance of a 25 basis point cut.
    Financial markets in South Korea were closed for a holiday.

    In offshore trading, the Korean won strengthened 0.3 percent against the dollar. – Reuters