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EM ASIA FX-Asian currencies broadly firmer as dollar slumps

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By Aditya Soni

Jan 12 (Reuters) - Asian currencies were broadly firmer on

Friday, as the dollar slumped in the wake of weak factory

inflation data and hawkish comments from the European Central

Bank.

The euro firmed against the dollar on Thursday after minutes

of the ECB's December meeting suggested that policymakers could

soon start preparing markets for the end of the central bank's

massive stimulus scheme.

Meanwhile, U.S. producer prices in December fell for the

first time in nearly 1-1/2 years amid declining costs for

services, which could temper expectations that inflation will

accelerate in 2018. That further added to weakness in the

dollar.

"The U.S. dollar was hammered on the back of mildly hawkish

European Central Bank minutes and a big miss on U.S. December

PPI which fell for the first time in 16 months," said Greg

McKenna, chief market strategist at CFD and FX provider

AxiTrader, in a note.

The Korean won led gains among regional

currencies, firming 0.8 percent. However, the won was on track

for its first weekly loss in five weeks.

The Malaysian ringgit strengthened 0.4 percent and

was on track to end the week 0.6 percent higher.

The Indian rupee firmed 0.2 percent, ahead of the release of

inflation data later in the day.

India's retail inflation likely rose to a 17-month high in

December, boosted by increased prices for some foods and the

impact of higher pay for government employees, a Reuters poll

showed.

A pick-up in inflation could push the central bank to

tighten monetary policy, as India's central bank restated a

neutral stance in December but said that "all possibilities are

on the table" depending on how price pressures and growth pan

out.

BAHT

The Thai baht strengthened 0.3 percent, and was on

track to end the week 1 percent higher, the best among regional

currencies.

Thailand expects to receive investment proposals of 720

billion baht ($22.56 billion) this year, up 12 percent from

2017, the investment promotion agency said on Friday.

The nation's solid fundamentals and continued bond portfolio

inflows continue to support the rise of the baht, said Qi Gao,

FX Strategist (EM Asia) at Scotiabank.

YUAN

The Chinese yuan strengthened 0.3 percent, after

data showed China's December exports beat analyst estimates and

the trade surplus rose to $54 billion, the highest since January

2016.

Exports from the world's second-largest economy beat

forecasts, up 10.9 percent from a year earlier, while imports

missed market expectations, rising only 4.5 percent, official

data showed.

Chang Wei Liang, FX strategist at Mizuho Bank, said that

despite the softening in import numbers, exports were in line

with expectations and the trade balance blew past market

forecasts. This could offer incremental support for the yuan

given that exporters are likely to keep a bid on the yuan for

now.


ASIAN CURRENCY POSITIONING

Investors raised bullish bets on most Asian currencies over

the last three weeks, as the dollar was hit by uncertainty over

the pace of U.S. rate increases, the euro rally and possible

tapering of Japanese stimulus.

Among regional currencies, long positions on the Indian

rupee reached its highest since August 2017, while the yuan saw

bullish positions being raised to their most since Sept. 9.

The following table shows rates for Asian currencies against

the dollar on Friday.

CURRENCIES VS U.S.


DOLLAR

Change on the day at 0620 GMT

Currency Latest bid Previous day Pct Move

Japan yen 111.240 111.24 +0.00

Sing dlr 1.328 1.3292 +0.08

Taiwan dlr 29.599 29.605 +0.02

Korean won 1064.000 1072 +0.75

Baht 31.900 32 +0.31

Peso 50.300 50.36 +0.12

Rupiah 13360.000 13397 +0.28

Rupee 63.530 63.66 +0.20

Ringgit 3.970 3.985 +0.38

Yuan 6.478 6.4978 +0.31

Change so far

Currency Latest bid End 2017 Pct Move

Japan yen 111.250 112.67 +1.28

Sing dlr 1.328 1.3373 +0.69

Taiwan dlr 29.599 29.848 +0.84

Korean won 1064.000 1070.50 +0.61

Baht 31.900 32.58 +2.13

Peso 50.300 49.93 -0.74

Rupiah 13360.000 13565 +1.53

Rupee 63.530 63.87 +0.54

Ringgit 3.970 4.0440 +1.86

Yuan 6.478 6.5069 +0.45

(Reporting by Aditya Soni in Bengaluru; Editing by Jacqueline

Wong)