Most Asian currencies were poised for weekly drops as some investors deemed policymakers in Europe and the US are not doing enough to revive the global economic recovery, damping demand for riskier assets.
The MSCI Asia Pacific Index of shares declined for a third day after the European Central Bank (ECB) signaled yesterday Germany’s reservations on its plan for joint bond purchases to stem the region’s debt crisis. The US Federal Reserve on Wednesday stopped short of suggesting an imminent third round of asset purchases.
The New Taiwan dollar fell 0.3 percent to NT$30.022 per US dollar this week after reports showed manufacturing and services in China grew at a slower pace last month than the month before, damping the outlook for shipments to the world’s second-largest economy. Taiwan’s currency dropped 0.1 percent from Wednesday after markets were closed on Friday due to a typhoon.
India’s rupee headed for a third weekly loss after the central bank held borrowing costs, while Indonesia’s rupiah fell for a third day after the nation posted its biggest trade deficit since at least 2008.
The rupee dropped 0.9 percent to 55.8350 per US dollar from a week ago as of Friday’s close, according to data compiled by Bloomberg. Thailand’s baht fell 0.3 percent to 31.60, headed for its biggest weekly loss since June, and fell 0.4 percent from Wednesday as markets were closed on Friday for a public holiday. The rupiah lost 0.2 percent this week and 0.1 percent today to 9,488.
The Bloomberg JPMorgan Asia Dollar Index dropped 0.1 percent, halting a three-week advance. Its 60-day historical volatility dropped to 3.78 percent from 3.85 percent on July 27. The Dollar Index, which tracks the greenback against the currencies of its six trade partners, jumped 0.7 percent this week in New York.
“China’s condition remains sluggish,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd in Tokyo. “It’s hard to be aggressively buying Asian currencies until China recovers.”
The rupiah was poised for a fourth weekly decline after official data on Wednesday showed exports fell 16.4 percent in June from a year earlier, the most since 2009. The trade deficit reached $1.3 billion, the largest since the data became available, a report showed the same day.
South Korea’s won fell 0.4 percent to 1,136 per US dollar as of 11:25am in Seoul yesterday, trimming its advance this week to 0.2 percent. Government reports this week showed industrial production shrank in June from May, and a slump in exports worsened last month. The Bank of Korea will next meet to review borrowing costs on Thursday.