*
Rupiah rises 0.4%
*
Peso set for worst monthly decline since September
*
S. Korean won weakest Asian currency in April
By Himanshi Akhand April 28 (Reuters) - The Indonesian rupiah was on track for a second straight monthly gain on Friday, while the Philippine and South Korean currencies were set to post monthly declines as investors remained cautious ahead of the U.S. Federal Reserve's meeting next week. The rupiah firmed 0.4% on Friday, and was set to end the month about 2.3% higher. It is the best performing Asian currency so far this year, boosted by continued portfolio investment inflows. "High interest rates on offer in the Indonesian government bond market are particularly attractive, especially when people are expecting global bond yields to have peaked," said Alvin Tan, head of Asia foreign exchange strategy at RBC Capital Markets. Tan expects the rupiah to continue strengthening in the near future but said gains would be challenged if risk aversion heightens or the Fed keeps tightening monetary policy beyond the one expected May hike.
Asian markets have largely been subdued in recent weeks,
with a lack of fresh triggers keeping trading confined to narrow
ranges.
"There is a huge uncertainty about what happens after the
Fed's rate hike, and it is keeping the market very cautious,"
Tan suggested.
Meanwhile, data pointing to still-sticky U.S. inflation has
reinforced expectations for a 25 basis point rate hike at next
week's Fed meeting. In Asia, Singapore's dollar and South Korea's won lost 0.1% and 0.2%, respectively. The won, Asia's
worst performing currency so far this year, was set for a 2.3%
monthly decline.
"The weaker currencies like won, ringgit and Singaporean
dollar in April belonged to countries that paused their monetary
policy tightening on growth worries," analysts at DBS noted.
The Philippine peso firmed 0.3%, but was set for its
worst monthly loss since September.
The country's central bank said annual inflation in April
was expected to come in between 6.3% and 7.1%. Inflation eased
for the second straight month in March, to 7.6%.
The central bank governor has earlier said Bangko Sentral ng
Pilipinas (BSP) aims to maintain its interest rate differential
with the Fed and considers it "dangerous" to cut interest rates
faster than the Fed.
A Reuters poll found that Malaysia's central bank is
expected to keep its key interest rate unchanged at 2.75% for a
third consecutive meeting on Wednesday and for the rest of this
year and next as inflation has cooled faster than expected.
The ringgit was largely flat.
Stocks in the region struggled for direction with Manila and Bangkok adding 0.7% and 0.2%, respectively,
and Jakarta declining 0.2%.
HIGHLIGHTS
** Bank of Japan announced it will maintain ultra-low
interest rates, as expected, and made no tweaks to its yield
curve
** Thai March factory output falls 4.56% y/y, worse than
forecast
** Singapore's private property prices rose in the first
quarter, slightly higher than the flash estimate
Asia stock indexes and currencies
at 0452 GMT
COUNTRY FX RIC FX FX INDE STOCKS STOCKS
DAILY % YTD % X DAILY YTD %
%
Japan -0.61 -2.71 <.N2 0.87 10.01
25>
China <CNY=CFXS +0.05 -0.24 <.SS 0.67 7.07
> EC>
India +0.09 +1.17 <.NS -0.02 -1.07
EI>
Indonesi +0.41 +6.32 <.JK -0.16 1.23
a SE>
Malaysia +0.04 -1.30 <.KL -0.07 -5.25
SE>
Philippi +0.29 +0.22 <.PS 0.71 0.97
nes I>
S.Korea <KRW=KFTC -0.18 -5.66 <.KS -0.10 11.49
> 11>
Singapor -0.07 +0.34 <.ST -0.17 0.77
e I>
Taiwan -0.05 -0.05 <.TW 0.84 9.93
II>
Thailand -0.07 +1.27 <.SE 0.22 -8.03
TI>
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: World FX rates Asian stock markets ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Himanshi Akhand in Bengaluru; Editing by Sam
Holmes)
