Asian currencies posted their first monthly loss since August, led by Indonesia’s rupiah and the Thai baht as concern about current-account deficits and political unrest in the region fueled fund outflows.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.4 percent last month, as the rupiah slid the most among 24 emerging-market currencies tracked by Bloomberg.
The baht had its worst month since May after the Bank of Thailand unexpectedly cut interest rates this week, as antigovernment protests weighed on investor confidence. International funds pulled US$2.8 billion from Thai, Indonesian and Taiwanese stocks last month through Thursday, exchange data show.
“This month’s decline isn’t on the back of large outflows as we saw in June, so it’s mostly due to confidence issues,” said Gundy Cahyadi, a Singapore-based economist at DBS Group Holdings Ltd, referring to the rupiah. “As long as the view remains gloomy, investors will be hesitant to come back in.”
The New Taiwan dollar slid 0.8 percent last month to NT$29.679 against the greenback. However, daily trading saw the local currency advance on Friday, as local exporters continued to sell the greenback in exchange for the local currency to settle their monthly accounts, dealers said.
Indonesia’s currency fell 5.8 percent last month to 11,963 per US dollar, prices from local banks show. It weakened beyond 12,000 for the first time since March 2009 on Thursday.
Thailand’s baht depreciated 3 percent to 32.090, Malaysia’s ringgit dropped 2.1 percent to 3.2240 and India’s rupee declined 1.5 percent to 62.45.
Indonesia’s current-account deficit was equivalent to 3.8 percent of GDP in the last quarter, official data show. Bank Indonesia sees a shortfall of 0.25 percent to 2.5 percent of GDP as sustainable, Governor Agus Martowardojo said on Nov. 22. The government’s first domestic sale of US dollar debt raised less than half the targeted amount this week.
The Bank of Thailand lowered its benchmark interest rate by a quarter of a percentage point to 2.25 percent this week, a decision not expected by any of the 19 economists surveyed by Bloomberg, amid concern escalated political unrest would hurt the economy.
Malaysia’s ringgit dropped for a sixth week, the longest losing streak since 2005, as signs of a pickup in the US economy bolstered speculation policymakers would trim stimulus that has buoyed emerging markets.
Elsewhere in Asia, the South Korean won rose 0.2 percent last month to 1,058.20, and China’s yuan gained 0.02 percent to 6.0932 as the central bank outlined plans to end normal intervention in the foreign-exchange market. Vietnam’s dong slipped 0.1 percent to 21,100, and the Philippine peso lost 1.3 percent to 43.772.
Meanwhile, the Japanese yen had its biggest monthly loss since January versus the US dollar on speculation that the fastest inflation in 15 years would lead Japanese Prime Minister Shinzo Abe to press on with unprecedented stimulus measures.
Sterling rallied on optimism the UK’s economic recovery was gathering pace. The euro reached the strongest in five years versus the yen as higher-than-forecast consumer prices fueled bets the European Central Bank would not add stimulus at a meeting on Thursday.
The yen fell 4 percent this month in New York to ￥102.44 per US dollar, and touched ￥102.61, the weakest level since May 23. The Japanese currency, which lost 1.1 percent this week against the greenback, is down 15 percent this year. It sank 4 percent to ￥139.22 per euro and reached ￥139.71, the weakest level since October 2008.