(Adds text, updates prices)
By Patturaja Murugaboopathy
Dec 5 (Reuters) - Asian currencies weakened on Wednesday,
with optimism over a U.S.-China trade truce fading amid rising
concerns an inversion of the U.S. Treasury yield curve points to
Regional currencies were bolstered earlier this week as
leaders of world's two largest economies agreed to a 90-day
truce to their trade war, however, a lack of specific details
has raised questions over the durability of the deal.
"Optimism surrounding the temporary trade ceasefire fades as
doubts about durability of the truce grow when Trump's economic
adviser backtracked from an earlier announcement that China had
agreed to lower tariffs on U.S.-made cars," said Zhu Huani,
economist at Mizuho Bank.
"Whilst Trump suggested that he might extend the 90-day
truce or impose tariffs if no deal is reached, this reinforces
concern that both sides are just kicking the can down the road."
Trump threatened on Tuesday to place "major tariffs" on
Chinese goods imported into the United States if his
administration is unable to reach an effective trade deal with
Also, investors remained nervous over an inversion of the
yield curve between three-year and five-year U.S. Treasury notes
and between two-year and five-year notes.
The yield spread between the U.S. 2-year and 10-year
tightened to its smallest since July 2007 this week. A flatter
yield curve is seen as an indicator of a recession.
Analysts said a slowing U.S. economy would affect Asian
markets as a whole, as many countries in the region are reliant
on their exports to the United States.
The Indonesian rupiah declined about 1 percent, hit
by higher crude oil prices, while the South Korean won
also fell 0.9 percent.
The Philippine peso shed nearly half a percent
after annual inflation eased in November for the first time in
almost a year, reducing pressure on the central bank to raise
China's yuan also slumped after gaining nearly 2
percent in the first two days of this week, while the Singapore
dollar and the Taiwan dollar dropped about a
quarter of a percent each.
The Indian rupee fell 0.23 percent against the
dollar, ahead of its central bank policy meeting later on
Analysts expect the Reserve Bank of India to leave interest
rates unchanged to support the economy that is losing momentum.
Economic growth slowed sharply in the July-September
quarter, when annual growth slipped to 7.1 percent from a more
than two-year high of 8.2 percent in the previous quarter, data
showed last week.
"In the coming quarters, government consumption is expected
to remain strong ahead of the general elections next year, but
other components of growth may continue to drag down overall
growth," MUFG Bank said in a note.
The following table shows rates for Asian currencies against
the dollar at 0529 GMT.
CURRENCIES VS U.S. DOLLAR
Change as of 0529
Currency Latest Previous Pct
bid day Move
Japan yen 113.020 112.77 -0.22
Sing dlr 1.368 1.3650 -0.19
Taiwan dlr 30.797 30.705 -0.30
Korean won 1115.00 1105.3 -0.87
Peso 52.780 52.52 -0.49
Rupiah 14425.0 14285 -0.97
Rupee 70.590 70.49 -0.14
Ringgit 4.156 4.145 -0.26
Yuan 6.862 6.8375 -0.36
*Thai markets closed
Change so far in
Currency Latest End 2017 Pct
Japan yen 113.020 112.67 -0.31
Sing dlr 1.368 1.3373 -2.22
Taiwan dlr 30.797 29.848 -3.08
Korean won 1115.00 1070.50 -3.99
Baht 32.700 32.58 -0.37
Peso 52.780 49.93 -5.40
Rupiah 14425.0 13565 -5.96
Rupee 70.590 63.87 -9.52
Ringgit 4.156 4.0440 -2.69
Yuan 6.862 6.5069 -5.18
(Reporting by Patturaja Murugaboopathy in Bengaluru
Editing by Jacqueline Wong)