Asian currencies had their worst back-to-back weekly loss this year after a political impasse in Greece roiled global markets and official reports showed exports from China, Malaysia and the Philippines slowed.
South Korea’s won had its worst five-day drop since December last year, while Malaysia’s ringgit and the Philippine peso slid the most in eight weeks as global funds pulled US$1.1 billion out of emerging-market stocks, according to a Citigroup Inc report citing EPFR Global data.
Greece’s political leaders are yet to agree on forming a new government following a May 6 election, fueling concern the country could renege on bailout accords. French Socialist Francois Hollande, who has called austerity measures to be delayed, was elected president.
The won slumped 1.3 percent this week to 1,146.55 per US dollar at the close on Friday in Seoul, the biggest loss in five months, according to data compiled by Bloomberg. The ringgit dropped 1 percent to 3.0716, the peso weakened 0.6 percent to 42.565 and Thailand’s baht fell 0.7 percent to 31.19 per US dollar, the lowest since January.
The Bloomberg-JPMorgan Asia Dollar Index dropped 0.4 percent from a week ago and reached the lowest level since Jan. 18 on Wednesday. It lost 0.7 percent over the past two weeks, the most since December last year. Its 60-day historical volatility rose to 2.75 percent from 2.72 percent a week ago.
The MSCI Asia Pacific Index of stocks plunged 4.5 percent, the biggest weekly loss since November, as JPMorgan Chase & Co disclosed a US$2 billion trading loss on synthetic credit securities.
Asian currencies tumbled after government reports this week showed Malaysia’s exports unexpectedly shrank 0.1 percent in March from a year earlier while shipments from the Philippines contracted 1.2 percent. China’s overseas sales grew 4.9 percent, while imports rose 0.3 percent last month, both trailing economists’ forecasts.
“The weak data cast doubts on the strength of China’s domestic consumption,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd, a unit of China’s second-largest bank.
The yuan could trade around 6.3 per dollar this quarter, he said.
China’s currency declined 0.07 percent to 6.3106 per dollar in Shanghai yesterday from a week ago. It touched 6.3188 on Friday, the weakest level since April 20.
The euro fell against the US dollar for a second week, reaching a three-month low, as concern mounted that politicians in Greece won’t be able to form a coalition government and the nation may exit the monetary union.
The 17-nation currency slumped after an inconclusive May 6 election and the subsequent struggle by leaders to form a government. The dollar gained against all its major peers, and the yen rose against all but the greenback, amid increased demand for havens.
The Bank of Korea kept its benchmark interest rate at 3.25 percent on Thursday, while Bank Indonesia maintained its reference rate at 5.75 percent. Bank Negara Malaysia kept the policy rate at 3 percent for a sixth straight meeting, the central bank said in a statement in Kuala Lumpur.
The Indian currency dropped 0.3 percent this week to 53.6350 per US dollar in Mumbai. It fell 0.4 percent yesterday and touched 53.905 on Thursday, 0.7 percent stronger than its record low of 54.305 on Dec. 15. The central bank said on Thursday that exporters must convert half of their overseas earnings, with compliance set within a fortnight.