Currency markets edgy on North Korea, US-Turkey tensions

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Currency markets were edgy in Asia trading on Monday amid fresh tension in North Korea, an escalating spat between Turkey and the US and political unease in New Zealand.

The dollar index – a measure of the greenback against a basket of peers – was down 0.1 per cent on Monday, failing to make up ground lost on Friday after the release of a Russia-linked report that North Korea was preparing to test a long-range missile that could reach the US west coast.

The Turkish lira fell as much as 6.6 per cent against the US dollar to an eight-month low in early, low-volume trading in Asia after the US blocked processing for the majority of new visas in Turkey, which responded in kind. The lira trimmed back those losses by late morning but was still down about 3.3 per cent on the day by late morning.

The New Zealand dollar sank as much as 0.6 per cent on Monday after a final vote tally from the country’s September election put the centre-left bloc in a stronger position heading into coalition negotiations this week. The currency fell from $0.7092 to $0.7050 against the greenback in early trading, its lowest point in four months, but had started to pare back losses to $0.7073.

In China, the renminbi was up about 0.4 per cent after country’s central bank set the midpoint around which the renminbi can trade 2 per cent in either direction against the dollar at Rmb6.6493, the softest level since August 25.

In the debt markets, major regional bonds were lower, dragging up yields. The US government 10-year note and the Australian equivalent were each up 1 basis point at 2.359 per cent and 2.818 per cent respectively.



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