Asian currencies posted their biggest weekly decline since November last year, led by Malaysia’s ringgit and India’s rupee, as regional stocks plunged on concern the global economic recovery is stalling.
Global funds sold US$2.1 billion more Taiwanese and South Korean shares than they bought this week through Thursday, exchange data show.
The Bloomberg-JPMorgan Asia Dollar Index declined 0.7 percent from a week ago to 119.11 on Friday.
The New Taiwan dollar strengthened 0.47 percent on the week to end at NT$29.025 on Friday.
The ringgit weakened 1.6 percent to 3.0150 per US dollar, the rupee slumped 1.2 percent to 44.74 per US dollar and South Korea’s won dropped 1.5 percent to 1,071.7. The Philippine peso fell 1 percent to 42.568.
The ringgit sank to a three-week low on Friday.
“People are shying away from risk in reaction to the meltdown in the stock markets in the US and Europe,” said Yeo Chin Tiong, head of financial markets at Alliance Bank BHD in Kuala Lumpur. “There are no signs of intervention from the central bank. What we are seeing is a lot of position squaring and adjustment.”
The won had its biggest weekly drop since February. The South Korean government will closely monitor the impact in financial markets, with officials from the finance ministry, the Bank of Korea and regulators to hold an emergency meeting today, the ministry said on Friday.
“Global stock market plunges are prompting foreign investors to sell South Korean stocks, dragging the currency down,” said Han Sung-min, a foreign-exchange dealer at Busan Bank in Seoul. “Still, a steep slide is unlikely as market players think the government will start intervening around 1,075.”
Elsewhere, the Singapore dollar fell 1.2 percent to S$1.2200 against its US counterpart. Indonesia’s rupiah declined 0.8 percent to 8,574 and the Thai baht weakened 0.2 percent to 29.89. China’s yuan slipped 0.05 percent to 6.4404.
US DOLLAR RALLY
Meanwhile, the US dollar rallied versus 15 of its 16 most-traded counterparts as concern the world’s largest economy is stalling and Europe’s debt crisis is worsening damped demand for higher-risk assets.
The Swiss franc climbed to records versus the greenback and euro this week as European leaders sought to stem the spread of sovereign fiscal trouble. The greenback pared gains on Friday after data showed US employers added more jobs than projected in July.
“We may have reached a peak of panic this week and next week we could see a bit of a recovery going forward, assuming data doesn’t deteriorate,” said Boris Schlossberg, research director at the online currency trader GFT Forex in New York.
The US dollar strengthened versus the euro for the first week in three, gaining 0.8 percent to US$1.4282 in New York, from US$1.4398 on July 29. It rose for the first time in five weeks against the yen, appreciating 2.1 percent to ￥78.40, the biggest jump since April 1. The yen fell 1.3 percent versus Europe’s 17-nation currency to ￥111.97.
The Swiss franc gained 2.4 percent to SF0.7674 per US dollar and touched a record SF0.7579. It rose 1.8 percent to SF1.0954 per euro and reached SF1.0711.
The yen dropped by the most since October 2008 against the US dollar on Thursday after the Bank of Japan unexpectedly sold the currency to stem gains that threaten the nation’s economic recovery. It fell as much as 4.1 percent to ￥80.24 per US dollar. It gained 0.6 percent on Friday to 78.40.