Asian forex: Trade war concerns weigh on region

Emerging market currencies in Asia weakened on Monday as a reported US government plan to curb Chinese investment in US tech companies weighed heavily on risk sentiment.
Asian equities retreated and Treasury bond yields declined after the Wall Street Journal said the US government was drafting rules that would block firms with at least 25 percent Chinese ownership from buying US companies involved in "industrially significant technology".
"Sino-US trade tensions will continue to weigh on Asian currencies this week. Note that the next salvo is expected to be restrictions on Chinese investments in the United States (expected by Friday)," OCBC Bank's Terence Wu said in a note on Monday.
"Asian currencies are more reactive to USD strength this time round, compared to the late April - May period. We think this may be due to the close deadlines on the trade tension front, and the lack of stability emanating from the RMB (yuan)complex."
China's yuan fell as much as 0.61 percent to its lowest against the dollar in more than 5 1/2 months.
The People's Bank of China said on Sunday it would cut the level of cash reserves that some banks must hold by 0.5 percent, releasing $108 billion in liquidity.
The move is aimed at accelerating the pace of debt-for-equity swaps to ease relatively tight liquidity conditions as Chinese authorities bear down on excessive debt.
Despite the loosening of reserve requirements, the yuan was not the biggest loser on Monday, with South Korea's won touching a level last seen in mid-November.
The won was 0.8 percent weaker on Monday. South Korea's export-oriented economy leaves it vulnerable to global trade disruptions.
Singapore's dollar was 0.34 weaker with data out on Monday showing inflation quickened in May.
The headline consumer price index for the city-state rose a higher-than-expected 0.4 percent in May from a year earlier.
The Indian rupee weakened 0.39 percent against the dollar, on track to fall for the first time in four sessions.
The Philippine peso lost about 0.31 percent.
The Indonesian rupiah fell 0.48 percent against the dollar after data from the country's statistics bureau showed a 28.1 percent jump in imports in May, influenced by higher oil prices, leading to a $1.52 billion trade deficit. The large spurt in imports overshadowed a 12.5 percent rise in exports over the same period.