backup1 - Most Asian currencies slip ahead of trade talks; Taiwan dollar gains

Most Asian currencies slip ahead of trade talks; Taiwan dollar gains

Most Asian currencies edged lower on Monday after risk appetites were dented by a media report saying China wants the scope of this week’s trade talks and any deal with the United States to be kept narrow.

Market sentiment was dampened by a Bloomberg report stating Chinese officials are signalling increasing reluctance to agree to a broad trade deal pursued by President Donald Trump.

Top-level trade talks between the United States and China are scheduled for Thursday and Friday.

“Risk of breakdown in trade talks will re-ignite fears and pose further upward pressure on USD-AXJs (Asia ex Japan),” a Maybank note said.

The report pulled the offshore yuan the currency most exposed to trade tensions, 0.3% lower against the dollar. Onshore trading in the yuan was closed due to a holiday in China.

Among Southeast Asian currencies, the Philippine peso <PHP=> declined the most, weakening 0.3%.

The Singapore dollar <SGD=> slipped 0.1% on weakness in the offshore yuan, while the Malaysian ringgit <MYR=> skidded 0.1%.

The Indonesian rupiah <IDR=ID> dropped 0.2%. Data showed that the country’s foreign reserves dropped by $2.1 billion to $124.3 billion in September, partly due to payments of offshore public debt.

TAIWAN DOLLAR

Bucking Monday’s trend, the Taiwan dollar <TWD=TP> firmed as much as 0.3% ahead of release of the island’s September trade data due at 0800 GMT Monday.

“We think TWD is likely to be more resilient compared to KRW and CNH, as it benefits from trade diversion and potential capital repatriation flows,” a Barclays note said.

Many companies have been moving their manufacturing facilities to the island amid rising tariffs imposed on Chinese goods by the United States.

Taiwan’s exports are likely to have grown 1% in September from a year earlier, logging a second month of growth, according to a Reuters poll.