Yuan set for longest weekly losing streak in 10 yrs

SINGAPORE: China's yuan fell to its weakest in 4-1/2 years on Friday and posted its longest weekly losing streak in a decade, dragging emerging Asian currencies lower, on concerns about its slowing economy and expectations of a U.S. interest rate hike next week.
    The yuan lost as much as 0.3 percent to 6.4550 per dollar, its weakest since July 2011.
    The renminbi has lost 0.8 percent against the dollar so far
this week, which would be its largest weekly depreciation since
the week of surprise devaluation on Aug. 11.
    The yuan has now fallen for six straight weeks, its longest
weekly losing streak, according to Thomson Reuters data going
back to December 2005.
    The extended decline has prompted traders to wonder how much
Beijing is prepared to allow the currency to fall.
    The People's Bank of China set its daily guidance rate at
its weakest level since August 2011.
    "The yuan's weakness will persist for the time being with a
4-5 percent further loss next year. That will put pressure on
Asian currencies," said Seungji Jeon, Samsung Futures' FX
analyst in Seoul.
    "Still, the speed of other Asian currencies' depreciation
may be slower than the yuan as they have more priced in
weakening factors such as a strong dollar."
    Pessimism on the yuan reached the highest level in more than
five years during the last two weeks, while views on most
emerging Asian currencies deteriorated on expectations of a U.S.
rate hike at its meeting on Dec. 15-16, a Reuters poll showed on
Thursday. 
    
    WEAK ASIA FX BEFORE U.S. LIFTOFF
    South Korea's won led weekly losses among
emerging Asian currencies with a 1.9 percent fall against the
dollar.
    Foreign investors continued to sell local equities,
unloading a combined net 2.1 trillion won ($1.8 billion) in
eight consecutive sessions, the Korea Exchange data showed.
    "Underlying growth momentum is likely to remain weak into
2016, and foreign and resident portfolio outflows could extend
as a result of challenging growth prospects and lower yields on
Korean assets," Barclays said in a weekly note.
    "Korea remains especially vulnerable to weaker Chinese
growth and CNY depreciation."
    The Malaysian ringgit has slid 1.3 percent this
week as a rout in global oil prices underscored concerns over
the country's falling oil and gas revenues.
    Indonesia's rupiah has fallen 0.8 percent through
the week on increasing corporate dollar demand for year-end
payments.
    The Singapore dollar has slumped 0.5 percent so far
this week, tracking the yuan's weakness. Thailand's baht
 has also eased 0.5 percent.
    Still, some analysts saw possibilities of a rebound, saying
prospects of the U.S. tightening next week have been priced in.
    "The risk is for a softer USD after the Fed moves," said
Andy Ji, Asian currency strategist for Commonwealth Bank of
Australia in Singapore.
    Ji said China may cap the yuan's weakness around 6.4500,
which would limit the downside in emerging Asian currencies.
    On Friday, major Chinese state banks were suspected to enter
the market to help stabilise the yuan on behalf of the central
bank, traders said. 
    
    CURRENCIES VS U.S. DOLLAR
    Change on the day at 0650 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen       121.99         121.55       -0.36
  Sing dlr        1.4055         1.4030       -0.18
  Taiwan dlr      32.806         33.015       +0.64
  Korean won     1178.12        1181.30       +0.27
  Baht             36.06          35.98       -0.22
  Peso             47.25          47.19       -0.12
  Rupiah        13945.00       13930.00       -0.11
  Rupee            66.79          66.71       -0.11
  Ringgit         4.2800         4.2625       -0.41
  Yuan            6.4509         6.4378       -0.20
 
  Change so far in 2015
  Currency    Latest bid  End prev year    Pct Move
  Japan yen       121.99         119.66       -1.91
  Sing dlr        1.4055         1.3260       -5.66
  Taiwan dlr      32.806         31.718       -3.32
  Korean won     1178.12        1099.30       -6.69
  Baht             36.06          32.90       -8.76
  Peso             47.25          44.72       -5.34
  Rupiah        13945.00       12380.00      -11.22
  Rupee            66.79          63.03       -5.62
  Ringgit         4.2800         3.4965      -18.31
  Yuan            6.4509         6.2040       -3.83
  ($1 = 1,178.14 won)
- Reuters