EM ASIA FX-Most currencies strengthen following surprise Fed rate cut

By Anushka Trivedi

* U.S. Fed cuts interest rates by 50 bps * Malaysia Jan exports drop * S. Korea says will take steps to tackle coronavirus woes By Anushka Trivedi March 4 (Reuters) - Most Asian currencies strengthened on Wednesday as a surprise 50 basis point rate cut by the U.S. Federal Reserve overnight sent yield-seekers looking east, with the Indonesian rupiah leading gains. Indonesia's finance minister affirmed that the rate cut could trigger capital inflows to the country. Its currency strengthened as much as 1% against the dollar to 14,130 rupiah, while stocks climbed 2%. The interest rate differential caused by the surprise cut is aiding gains in regional currencies against the dollar, said Jingyi Pan, a Singapore-based market strategist with financial services firm IG. "The willingness of the Fed to show support here perhaps also outlines the possibility of further monetary support coming along," Pan added. The Fed lowered borrowing costs on Tuesday in a bid to protect the world's largest economy from the coronavirus impact, but the emergency move failed to spur confidence as U.S. equities dropped on worries about a deeper, lasting slowdown. The dollar touched a five-month low against the safe-haven Japanese yen. Yields on the U.S. benchmark 10-year Treasury fell below 1% after the cut, reducing the appeal of the greenback. Among Asian currencies, the Chinese yuan strengthened 0.6% after People's Bank of China set a firmer midpoint rate. The South Korean won hit an over two-week high, firming 0.8%. The country's top financial authorities agreed to take bold, pre-emptive measures, if needed, to tackle economic woes stemming from the coronavirus, an official said. The Taiwan dollar, Philippine peso and Thai baht advanced between 0.4% and 0.5% each. The Thai central bank joined a chorus of monetary authorities promising measures to combat the coronavirus fallout, following the Fed's emergency cut. The bank said it was closely watching the situation and would act as appropriate. Data from Malaysia showed a drop in exports in January after they saw a surprise rebound in the previous month. The ringgit gained 0.2%. Adding to further political tumoil in the nation, its new prime minister delayed the start of parliamentary proceedings by two months, as the opposition sought to challenge his government with a confidence vote. INDIAN RUPEE Indian services sector grew at its fastest pace in seven years in February, bolstered by a recovery in foreign demand and business confidence, a private survey showed. However, the Indian rupee fell 0.1% against the dollar. "The risk to further near-term rupee weakness is high, especially given its seasonal weakness in the second-quarter," ANZ analysts said in a note. "The U.S. Federal Reserve's emergency 50bp cut yesterday will not alter the rupee's trend," they added. CURRENCIES VS U.S. DOLLAR AS AT 0511 GMT. Currency Latest bid Previous day Pct Move Japan yen 107.390 107.12 -0.25 Sing dlr 1.388 1.3876 -0.01 Taiwan dlr 29.960 30.087 +0.42 Korean won 1185.700 1195.2 +0.80 Baht 31.380 31.53 +0.48 Peso 50.590 50.82 +0.45 Rupiah 1,4150.000 1,4275 +0.88 Rupee 73.345 73.25 -0.13 Ringgit 4.182 4.19 +0.19 Yuan 6.933 6.9761 +0.62 Change so far in 2020 Currency Latest bid End 2019 Pct Move Japan yen 107.390 108.61 +1.14 Sing dlr 1.388 1.3444 -3.12 Taiwan dlr 29.960 30.106 +0.49 Korean won 1185.700 1156.40 -2.47 Baht 31.380 29.91 -4.68 Peso 50.590 50.65 +0.12 Rupiah 14150.000 13880 -1.91 Rupee 73.345 71.38 -2.68 Ringgit 4.182 4.0890 -2.22 Yuan 6.933 6.9632 +0.43 (Reporting by Anushka Trivedi in Bengaluru; Editing by Vinay Dwivedi)