EMERGING MARKETS-Yuan anchors Asian FX as caution spikes ahead of U.S. election

  • Reuters
  • Stock Market News
EMERGING MARKETS-Yuan anchors Asian FX as caution spikes ahead of U.S. election
Credit: © Reuters.

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh

* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3lKhL5I

* Yuan rises nearly 0.5% on China's new 5-year plan

* South Korean won top gainer for October, up 3%

* Philippine stocks end with near 8% monthly gain

* Malaysia cenbank meet, 2021 budget in focus next week

* Indian and Indonesian forex markets shut due to local holidays

By Rashmi Ashok

Oct 30 (Reuters) - Strong gains in the Chinese yuan supported most Asian currencies on Friday, shielding them from a broader gloomy mood weighing on regional equities ahead of the U.S. presidential election.

Worries about the outcome of Tuesday's election have remained at the fore, given the stark difference between Democratic candidate Joe Biden and President Donald Trump's views on foreign policy and trade, particularly towards Asia.

The yuan CNY=CFXS jumped 0.5% against the dollar after China's leaders endorsed a new five-year plan to drive sustained economic growth, which markets believe will require a stronger currency. helped boost the closely tied Singapore dollar SGD= by 0.2%, while the Thai baht THB=TH rose by a similar margin.

While cases are surging elsewhere, the COVID-19 situation in Asia remains largely under control, with China's swift economic recovery driving the resilience of the yuan and other Asian currencies, said Sim Moh Siong, FX strategist at Bank of Singapore.

"The second factor is the U.S. elections. If Biden wins, and polls are indicating he's in the lead, it could lead to a less aggressive trade policy, further anchoring the yuan," he added.

"For Asia, overall, the risk environment is going to be cautious, but there's no panic."

The region's equities were subdued after Wall Street's sell-off as cases continued to surge in the United States, while fears of more lockdowns across Europe, following France and Germany's moves this week, also dented the mood. October, most Asian currencies were set to end higher, with the South Korean won KRW=KFTC logging its best monthly performance since June 2019, with a 3% gain.

Most stock markets, however, were set to end the month with losses. The Thai index .SETI was on track for a 3.4% drop sparked by political ructions and protests.

Philippines' equities .PSI , in contrast, breezed past peers with an 8% gain, as a the gradual reopening of the economy and upbeat COVID-19 case trends spurred investor confidence.

In the week ahead, the focus will turn to Malaysia's central bank policy meeting on Tuesday, followed by the government's 2021 budget presentation on Friday.

The latter is seen as a key test to gauge support the prime minister wields amid recent political tensions, with fears prevalent that the budget bill might not get through parliament given the slim coalition majority his government holds.

The Indian currency market was shut on Friday for a local holiday, while in Indonesia, both equities and forex markets were closed.

HIGHLIGHTS

** In the Philippines, top index gainers were Aboitiz Equity Ventures Inc AEV.PS , up 5.82%, and JG Summit Holdings Inc JGS.PS , up 3.71%.

** Top losers on the Singapore index .STI include UOL Group Ltd UTOS.SI , down 3.72%, and Ascendas Real Estate Investment Trust AEMN.SI , down 3.33%.

** Singapore's 10-year benchmark yield is down 0.2 basis point at 0.831%​​ and the 5-year benchmark yield is up 0.2 basis point at 0.498%​​

Asia stock indexes and

currencies at 0650 GMT

COUNTRY FX RIC

FX

FX

INDEX STOCK STOCK

DAILY YTD %

S S YTD

%

DAILY

%

%

Japan

JPY=

+0.29 +4.12 .N225 -1.52 -2.87 China

.SSEC -1.61 5.57

S>

Malaysi MYR=

-0.10 -1.66 .KLSE -1.23 -7.05 a

Philipp PHP=

-0.04 +4.66 .PSI

1.19 -19.0 ines

8 S.Korea .KS11 -2.56 3.16

C>

Singapo SGD=

+0.10 -1.55 .STI

-1.00 -24.7 re

2 Taiwan

TWD=TP +1.05 +5.21 .TWII -0.92 4.58 Thailan THB=TH +0.16 -4.10 .SETI -0.57 -24.3 d

7

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