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EM ASIA FX-Most Asian currencies drop on lower U.S. yields, growth worries

(Adds text, updates prices)

By Patturaja Murugaboopathy

Dec 6 (Reuters) - Most Asian currencies were hit on Thursday

as the U.S. bond market signalled trouble ahead for the world's

biggest economy, while the arrest of a top executive of a

Chinese tech firm in Canada for extradition to the United States

shook risk markets.

An inversion of the U.S. yield curve, with the two-year

yields moving above the five-year rates, has prompted recession

worries and rattled global riskier assets.

There has also been a flattening of the curve further out,

as spreads between two- and 10-year U.S. Treasury yields

tightened towards their narrowest in more than a decade on


While few expect the U.S. economy to slow sharply anytime

soon, an inverted yield curve has stoked fears of a recession

down the road. Historically, the economy has taken anywhere

between 12 months and 24 months to fall into a recession when

the yield curve inverts.

Leong Sook Mei, ASEAN head of global markets research at

MUFG Bank, said the moves in U.S. bond yields will affect global

equities and impact Asian currencies as well.

She noted that Asia is vulnerable to any U.S. slowdown as

many of the economies rely heavily on the United States for


"Asian currencies will definitely be affected, if the U.S.

yield curve is inverted. It will come on top of the trade war

concerns," said Mei.

Moreover, the arrest of a top executive of Chinese tech

giant Huawei Technologies fanned fears of a fresh flare-up in

tensions between China and the United States.

The arrest comes at a particularly tricky time after U.S.

President Donald Trump and his Chinese counterpart Xi Jinping

reached a temporary truce in their trade war in a weekend

meeting in Argentina.

"Trump's threat that he is a "tariff man" should China

refuse to comply with US trade demands, alongside the arrest of

a high level Huawei executive, raises fear that the positivity

from the Trump-Xi summit may unwind," said Wei Liang Chang, an

FX strategist at Mizuho Bank.

The Indonesian rupiah led the regional declines,

shedding more than 1 percent, while the Indian rupee fell

0.7 percent.

India's central bank kept interest rates unchanged on

Wednesday, as expected, on easing inflation worries and in

efforts to persuade banks to lend more to support an economy

that has lost some momentum.

The South Korean won, Thai baht,

Malaysian ringgit and China's yuan, all shed

more than a quarter percent each on Thursday.


The Indonesian rupiah dropped more than 1 percent

against the dollar, hurt by a slump in its bond and equity


Indonesia's central bank intervened in the domestic

non-deliverable forward (NDF) market on the day,

to support the rupiah, Bank Indonesia's (BI) head of monetary

management Nanang Hendarsah said.

Last week, its central bank said it viewed the rupiah as

still undervalued.

The rupiah has fallen 6.7 percent this year, and is the

second worst performer in the region after the Indian rupee.

The following table shows rates for Asian currencies against

the dollar at 0610 GMT.


Change as of 0610


Currency Latest Previous Pct

bid day Move

Japan yen 112.790 113.19 +0.35

Sing dlr 1.370 1.3668 -0.26

Taiwan dlr 30.848 30.806 -0.14

Korean won 1118.60 1114.1 -0.40


Baht 32.820 32.7 -0.37

Peso 52.690 52.74 +0.09

Rupiah 14548.0 14390 -1.09


Rupee 71.010 70.46 -0.77

Ringgit 4.165 4.1525 -0.30

Yuan 6.877 6.8580 -0.27

Change so far in


Currency Latest End 2017 Pct

bid Move

Japan yen 112.790 112.67 -0.11

Sing dlr 1.370 1.3373 -2.42

Taiwan dlr 30.848 29.848 -3.24

Korean won 1118.60 1070.50 -4.30


Baht 32.820 32.58 -0.73

Peso 52.690 49.93 -5.24

Rupiah 14548.0 13565 -6.76


Rupee 71.010 63.87 -10.0


Ringgit 4.165 4.0440 -2.91

Yuan 6.877 6.5069 -5.38

(Reporting by Patturaja Murugaboopathy in Bengaluru

Editing by Shri Navaratnam)