EM ASIA FX-Most currencies weaken as rate-cut bets rise in Asia

By Anushka Trivedi

* S.Korean won loses 1%, most among Asian currencies * More easing from central banks expected - DBS analysts * Markets pricing in 100 basis point cut by U.S. Fed (Adds text, updates prices) By Anushka Trivedi March 12 (Reuters) - Most Asian currencies weakened on Thursday, as expectations rose for rate cuts by central banks in the region after world health officials called the coronavirus outbreak a pandemic. Rattling already nervy markets, U.S. President Donald Trump suspended travel from most European countries for a month, which threatens to cause more disruptions to trade and the world economy. Following the news, odds of a one percentage point cut to interest rates at the Federal Reserve's policy review next week climbed, while the dollar declined 1% against the yen and the 10-year U.S. Treasuries yield fell slightly. DBS analysts said in a note that more easing could be expected from central banks over the next few weeks, including in emerging markets. The Indonesian, Taiwan and Philippine central banks are set to hold their monetary policy meetings next week. "With financial conditions still tight, we suspect that several 2008-09 crisis era options will also be explored," they said. Singapore's president said the city-state would consider tapping national reserves to fund a second economic package, which would be the first such move since 2009. Several economists have trimmed their 2020 growth forecasts for the trade-reliant economy, citing disruption from the epidemic and weakness in the local dollar. This could see its central bank re-centre the Singapore dollar-NEER policy band lower, DBS analysts said. SGD-NEER refers to the exchange rate of the Singapore dollar managed against a trade-weighted basket of currencies. The Singapore dollar was trading 0.4% lower, while the Indonesian rupiah weakened 0.9% to 14,465 against the dollar. Indonesia's central bank acted on its promised intervention to steady the currency amid capital outflows by purchasing 4 trillion rupiah ($276.53 million) worth of government bonds in an auction. Bank Indonesia may conduct a second auction later in the afternoon session, an official said. Other Asian currencies also took a bearing, with the Indian rupee and the Thai baht sliding 0.7% and 0.4%, respectively. South Korea, the country with the largest outbreak in Asia outside China, saw its currency weaken 1%, the most among Asian currencies. The Philippine peso dropped 0.6% after the senate went into lockdown on Thursday, with President Rodrigo Duterte set to undergo testing for the virus. Investors now await a meeting of the European Central Bank (ECB), which is all but certain to unveil new stimulus measures later in the day, after the Bank of England surprised markets with a 50 basis point rate cut on Wednesday. Some analysts have questioned the effectiveness of these rate cuts, saying they "may provide a temporary relief in the credit markets, but will not solve the underlying issue of the rapidly spreading virus around the world", CMC Markets Singapore analyst Margaret Yang Yan said. ($1 = 14,465.0000 rupiah) The following table shows rates for Asian currencies against the dollar at 0537 GMT. CURRENCIES VS U.S. DOLLAR Currency Latest bid Previous day Pct Move Japan yen 103.970 104.53 +0.54 Sing dlr 1.401 1.3950 -0.42 Taiwan dlr 30.138 30.095 -0.14 Korean won 1205.100 1193 -1.00 Baht 31.550 31.41 -0.44 Peso 50.940 50.63 -0.61 Rupiah 14465.000 14340 -0.86 Rupee 74.145 73.65 -0.67 Ringgit 4.250 4.237 -0.31 Yuan 6.975 6.9603 -0.21 Change so far in 2020 Currency Latest bid End 2019 Pct Move Japan yen 103.970 108.61 +4.46 Sing dlr 1.401 1.3444 -4.03 Taiwan dlr 30.138 30.106 -0.11 Korean won 1205.100 1156.40 -4.04 Baht 31.550 29.91 -5.20 Peso 50.940 50.65 -0.57 Rupiah 14465.000 13880 -4.04 Rupee 74.145 71.38 -3.73 Ringgit 4.250 4.0890 -3.79 Yuan 6.975 6.9632 -0.17 (Reporting by Anushka Trivedi in Bengaluru; Editing by Subhranshu Sahu)