Indonesia’s rupiah led a fall in Asian currencies this week as slowing economic growth in China dimmed the region’s export outlook.
China, the No. 1 destination for shipments from Taiwan, Indonesia, Thailand and South Korea, reported on Monday that expansion slowed for a second quarter. Apart from the rupiah and Malaysia’s ringgit, regional currencies weakened by 0.2 percent or less, as a reassurance from the US Federal Reserve that a tapering of stimulus is not imminent supported inflows.
“Asian nations’ dependence on China has been increasing and uncertainty surrounding China’s growth is raising concern about the region’s export outlook,” said Tohru Nishihama, a Dai-ichi Life Research Institute Inc economist.
The New Taiwan dollar lost 0.2 percent this week to NT$29.978, compared with NT$29.932 on July 12. The rupiah dropped 0.8 percent to 10,078 per US dollar in Jakarta, according to prices from local banks compiled by Bloomberg, Malaysia’s ringgit weakened 0.5 percent to 3.1923 and China’s yuan was little changed at 6.1379.
Fed Chairman Ben Bernanke’s comments in May and last month that the Fed may taper the program, which has driven emerging market inflows, sparked a slide in Asian currencies, debt and shares.
Foreign funds bought US$1.3 billion more Taiwanese, South Korean and Thai stocks than they sold in the first four days of the week, exchange data show.
The rupiah fell for a record 11th day on Friday and weakened beyond the 10,000 per US dollar level this week for the first time since 2009. Bank Indonesia Deputy Governor Perry Warjiyo said on July 11 the monetary authority has supplied US dollars to the market in the past two to three months while allowing the rupiah to slowly retreat.
The People’s Bank of China cut the yuan’s fixing on four of five days this week, lowering it to 6.1751 per US dollar on Friday, 0.2 percent less than on July 12. The Chinese currency can trade as much as 1 percent either side of the reference rate. The yuan is the only gainer among the 11 most-traded Asian exchange rates this year, rising 1.5 percent.
Elsewhere in Asia, India’s rupee rose 0.5 percent this week to 59.35 per US dollar on Friday on speculation the Central Bank of India intervened. The Philippine peso strengthened 0.1 percent to 43.362, Thailand’s baht rose 0.4 percent to 31.03, South Korea’s won rose 0.2 percent to 1,121.75 and Vietnam’s dong was steady at 21,223.
The US dollar fell for a second week versus most major peers after climbing last month when the Fed said bond-buying might be slowed.
The greenback weakened 0.6 percent to US$1.3143 per euro this week in New York, while the yen dropped 1.4 percent to ￥100.65 to the US currency and the euro appreciated 2 percent to ￥132.26 yen.
The Mexican peso was the best performer this week among the greenback’s 16 most-traded counterparts tracked by Bloomberg, rising 2.3 percent to 12.5325.
The yen fell after Bank of Japan (BOJ) policymakers at a meeting last week stuck with their pledge to expand the monetary base by ￥60 trillion (US$605 billion) to ￥70 trillion per year in their effort to stem deflation and stoke growth.
“The Fed is inching toward less accommodation, and the BOJ is still full-steam ahead on accommodation,” Westpac Banking Corp’s Richard Franulovich said on Monday.
The pound strengthened versus the euro for the first time in six weeks as minutes from the Bank of England’s last meeting showed policymakers voted unanimously against expanding stimulus.