Singapore Markets closed

EM ASIA FX-Asian currencies find respite as U.S. yields dip

(Corrects typo in Mizuho in 12th paragraph)

* Dollar pause gives life to local units

* Investors eye U.S. inflation data for signs of slowing

price

growth

* Rupee gains on back of easing oil prices

By Nikhil Nainan

Oct 10 (Reuters) - A retreat in U.S. debt yields gave Asian

currencies some respite on Wednesday, but going forward they are

likely to remain under pressure due to the prospect of more rate

hikes from the U.S. Federal Reserve.

Benchmark U.S 10-year Treasury yields came off seven-and-a

-half-year highs overnight, though investors continue to bet

that the Fed will remain on its policy tightening path, despite

President Donald Trump criticising the central bank on Tuesday

for raising rates too fast.

Investors are focussed on U.S. inflation data due to be

released on Thursday. A Reuters poll forecast that data would

show inflation slowed to 2.4 percent.

The Thai baht was Asia's best performer,

strengthening 0.5 percent to 32.860 per dollar, as analysts

reckoned Thai interest rates would soon start increasing again,

having not risen since 2011.

The country's central bank meets on Nov.14, and its board

members were split when it opted to hold the policy rate steady

last month.

"The prospects of the beginning of a rate normalization in

Thailand still looks pretty strong to us, given that the output

gap has likely closed," said Wei Liang Chang, FX strategist at

Mizuho Bank.

Meanwhile, the Philippine peso was unmoved after

initially weakening following August trade data that showed a

deficit above $3 billion for a fifth month.

The peso has lost nearly 8 percent this year.

Taiwan financial markets were closed for a holiday.

CHINESE YUAN

The yuan firmed 0.1 percent against the dollar to

6.916.

A Reuters poll forecast China's onshore yuan would pare some

of its recent losses against the dollar over the coming year, as

analysts expected risks would fade from both the U.S.-China

trade war and the emerging markets sell-off.

Mizuho's Wei Liang believes the People's Bank of China would

take a balanced approach, not wanting to stoke capital outflows

by letting the currency weaken too much.

Fall out from the trade war prompted the International

Monetary Fund (IMF) to lower its China's 2019 economic growth

forecast to 6.2 percent from 6.4 percent.

VOLATILE RUPEE

A slip in oil prices helped the rupee, Asia's worst

performer this year, firm 0.4 percent to 74.098 against the

dollar, having plumbed record lows a day earlier.

The rupee is expected to stay near record lows over the

coming year despite expectations that the Reserve Bank of India

will raise rates in December and once more in 2019. India is set

to hold a general election by May, though investors will also be

watching how Prime Minister Narendra Modi's Hindu nationalist

party fares in a series of state polls later this year.

"The rupee will remain fairly weak over the next three to

four months," said Wei Liang Chang.

CURRENCIES VS U.S. DOLLAR

Change on the day at 0547 GMT

Currency Latest bid Previous day Pct Move

Japan yen 112.980 112.94 -0.04

Sing dlr 1.380 1.3819 +0.17

Korean won 1132.400 1132.7 +0.03

Baht 32.860 33.03 +0.52

Peso 54.150 54.15 +0.00

Rupiah 15200.000 15225 +0.16

Rupee 74.098 74.39 +0.39

Ringgit 4.150 4.155 +0.12

Yuan 6.916 6.9260 +0.14

Change so far in 2018

Currency Latest bid End 2017 Pct Move

Japan yen 112.980 112.67 -0.27

Sing dlr 1.380 1.3373 -3.07

Taiwan dlr 30.968 29.848 -3.62

Korean won 1132.400 1070.50 -5.47

Baht 32.860 32.58 -0.85

Peso 54.150 49.977 -7.71

Rupiah 15200.000 13565 -10.76

Rupee 74.098 63.87 -13.80

Ringgit 4.150 4.0440 -2.55

Yuan 6.916 6.5069 -5.92

(Reporting by Sumeet Gaikwad and Nikhil Kurian Nainan in

Bengaluru; Editing by Simon Cameron-Moore)