Asian currencies this week posted their second week of gains as Indonesia’s rupiah and South Korea’s won led a rally after weak US data tempered concerns about the pace of the US Federal Reserve’s taper.
The Bloomberg JPMorgan-Asia Dollar Index rose 0.6 percent from Feb. 7. Sales at US retailers fell last month by the most since June 2012 and the number of Americans seeking jobless benefits last week rose unexpectedly, official reports showed on Thursday.
Fed Chair Janet Yellen said the monetary authority’s bond-purchase program will be pared in “measured steps” and that only a notable change in the US’ economic outlook would prompt a change.
“Disappointing US data was taken by markets as a sign of a less hawkish Fed outlook,” Hong Kong-based Credit Agricole CIB strategist Dariusz Kowalczyk wrote in a note on Friday. “As a result, emerging market sentiment should be positive and currencies firm up.”
The rupiah surged 2.8 percent to 11,825 per US dollar in Jakarta this week, according to local prices compiled by Bloomberg, while the won strengthened 1 percent to 1,063.35.
In Taipei, the New Taiwan dollar gained 0.2 percent to NT$30.347 this week, compared with NT$30.406 on Feb. 7.
A gauge of expected fluctuations in the currency dropped by the most in seven months this week, a sign that the NT dollar may be stabilizing after falling 2.4 percent in three months. Taiwan’s currency has weakened the most among Asia’s 11 most-traded currencies this year.
One-month implied volatility — a measure used to price options — slid 50 basis points this week in the biggest decline since the five days ended on July 5 last year, data compiled by Bloomberg show.
Global funds have sold US$1.3 billion more Taiwanese equities than they bought this year, compared with US$9.2 billion of inflows for the whole of last year, exchange data show.
“Taiwan’s dollar may be stabilizing at a relatively weak level,” said Samson Tu (涂韶鈺), a Taipei-based fund manager at Uni-President Assets Management Corp (統一投信). “Fund inflows are slowing, which reflects the general trend of capital exiting emerging markets.”
Elsewhere in the region, Malaysia’s ringgit advanced 0.7 percent to 3.3064 per US dollar, the Philippine peso added 0.6 percent to 44.723 and Vietnam’s dong was little changed at 21,100.
In Bangkok, where markets were closed on Friday for a holiday, the baht gained 0.6 percent through Thursday to 32.592, while in Beijing, China’s yuan weakened to 6.0668 per US dollar versus 6.0634 on Feb. 7 after the People’s Bank of China raised its daily fixing to 6.1070 from 6.1089 over the period.
The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, reached the highest level since Jan. 15.
Bond and stock outflows from Asia’s developing economies was US$2.23 billion in the week to Wednesday, versus US$4.24 billion a week earlier, Australia & New Zealand Banking Group reported, citing EPFR Global data.
Meanwhile, the greenback declined for a second week, touching its lowest level in almost a month, as the weaker-than-expected US economic data added to evidence that severe winter has weather weighed on the US economy.
The euro fell versus most major peers amid speculation that the European Central Bank will consider negative deposit rates.
The Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, declined 0.6 percent this week to 1,017.47 in New York.