Asian currencies ex-Japan fell this week, led by South Korea’s won, as Chinese economic data missed estimates and a stronger US recovery added to speculation the US Federal Reserve would cut its stimulus further.
The Bloomberg-JPMorgan Asia Dollar Index dropped for a second week as reports showed US sales of existing homes last month capped the best year since 2006 and jobless claims held near a six-week low. Signs of a sustained economic pickup fueled bets the Fed will continue to reduce bond-buying that has spurred fund flows to emerging markets.
Manufacturing in China, Asia’s biggest economy, may have contracted this month, a preliminary reading showed on Thursday.
“Weak data in China are strengthening demand for safety assets like the dollar,” said Hong Seok-chan, a currency analyst at Daishin Economy Research Institute in Seoul. “US tapering expectations offer a continued boost for the greenback.”
The won recorded its worst week in seven months, slumping 1.9 percent from Jan. 17 to 1,080.36 per US dollar, data compiled by Bloomberg show.
In Taipei, the New Taiwan dollar slid 0.7 percent to NT$30.42 from NT$30.221 on Jan. 17.
Exporters sold their US dollar holdings to meet payments in the local currency ahead of the Lunar New Year holiday, and the selling is likely continue until the forex market closes for holiday on Thursday, dealers said.
Trading will resume on Feb. 5.
Foreign institutional investors also boosted demand for the local currency, buying a net NT$1.9 billion (US$62.46 million) in shares on Friday, dealers said.
Putting further downward pressure on the US dollar was a rising Chinese yuan, after the People’s Bank of China raised the reference rate for the yuan against the greenback, they said.
The yuan rose 0.02 percent this week to 6.0488.
Malaysia’s ringgit slid 1.1 percent, its biggest weekly loss in a month, to 3.3334. India’s rupee dropped 1.8 percent, the most since August, to 62.6850, and Indonesia’s rupiah fell 0.7 percent to 12,180.
The Philippine peso slipped 0.6 percent to 45.307 per US dollar and Thailand’s baht weakened 0.1 percent to 32.84. Vietnam’s dong climbed 0.02 percent to 21,085.
Meanwhile, the yen rallied the most in a week versus the US dollar since August, as a selloff in emerging-market currencies stoked demand for haven assets.
The yen gained against all but two of 174 global peers, and the Swiss franc rose the most since September, as increased scrutiny of credit risks in China boosted refuge demand.
Argentina’s peso tumbled 15 percent as the worst global performer after the country devalued the currency.
The yen rallied 1.9 percent to ￥102.31 per US dollar this week after reaching ￥102, the biggest advance since the week ended Aug. 9 and the strongest level since Dec. 6. It appreciated 0.9 percent to ￥139.98 per euro.
The 18-nation currency rose 1 percent to US$1.3678.
The pound also strengthened to a two-and-a-half-year high versus the greenback as the unemployment rate in the three months through November fell to 7.1 percent, beating analyst expectations and prompting Bank of England Governor Mark Carney to pledge to keep down interest rates to support the recovery.
The UK currency gained 0.4 percent in the week to US$1.6491 on Friday, after touching US$1.6668, the highest level since May 2011. However, the pound weakened 0.6 percent to ￡0.8293 per euro after appreciating to ￡0.8168 on Wednesday, the strongest since Jan. 10 last year.