Asian currencies had their biggest monthly decline in a year as investors pulled money from regional assets after the US Federal Reserve said it could taper its stimulus if the US economy shows sustained improvement.
The Bloomberg-JPMorgan Asia Dollar Index dropped by the most since May last year as US consumer confidence rose to a five-year high. Foreign funds were net sellers of stocks in Taiwan, Indonesia, Thailand and the Philippines this week after a report indicated Chinese manufacturing shrank last month. Global investors pulled US$224 million from emerging-market bond funds in the week through Wednesday, Morgan Stanley said in a report, citing data published by EPFR Global.
“The Fed could actually tighten as the recovery in the US is looking good and sustainable,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd in Kuala Lumpur. “The sentiment is shifting in favor of the dollar and local bonds got sold off.”
Asian policymakers made efforts to shore up growth last month, with South Korea and Thailand cutting their benchmark interest rates by 25 basis points to 2.5 percent. Taiwan’s government announced stimulus measures to boost domestic demand to counter a slowdown in exports.
The New Taiwan dollar fell 1.5 percent to NT$30.06 per US dollar last month. Foreign-exchange dealers said with the South Korean won weakening, Taiwan’s central bank dumped US dollars on Friday to support the greenback around the NT$30 level to maintain Taiwan’s global competitiveness.
India’s rupee slumped 4.8 percent to 56.5050 per US dollar from April 30, touching an 11-month low on Friday, according to data compiled by Bloomberg. It declined the most since May last year after Indian central bank Governor Duvvuri Subbarao said retail inflation was still high and the nation’s balance of payments was under stress.
Thailand’s baht fell 3.2 percent to 30.31 and the Philippine peso slid 2.6 percent to 42.263, reaching an 11-month low on Thursday.
Elsewhere in Asia, South Korea’s won fell 2.5 percent to 1,129.64 per US dollar last month, data compiled by Bloomberg show. Malaysia’s ringgit depreciated 1.7 percent to 3.0952 and Indonesia’s rupiah dropped 0.7 percent to 9,795. China’s yuan rose for a third month, strengthening 0.5 percent to 6.1345 and touching a 19-year high of 6.1210 on Monday.
The euro dropped from the highest level in three weeks versus the US dollar as demand for the currency bloc’s assets faded after data showed German retail sales fell and the region’s unemployment rose to a record.
The US dollar gained as stronger-than-forecast data on US business activity and consumer confidence overshadowed an unexpected drop in consumer spending, bolstering bets the US Federal Reserve would reduce stimulus. The yen strengthened versus all of its 16 most-traded peers.
The euro weakened 0.4 percent to US$1.2999 at 5pm New York time, paring a weekly gain to 0.5 percent. It depreciated 0.6 percent to ￥130.64.
Japan’s currency gained 0.3 percent to ￥100.45 per US dollar and climbed as much as 0.5 percent to ￥100.22, the strongest level in three weeks. The yen gained 0.9 percent this week against the greenback. It fell 3 percent against the US dollar last month in its eighth consecutive monthly decline, the longest losing streak since 1996.