Asian currencies recorded their first weekly loss in almost a month as the conflict in Ukraine and a recovering US economy spurred demand for the greenback.
After four-way talks on the Ukraine crisis produced an accord this week aimed at deescalating the situation, US officials and their European allies warned that Russia must help produce results in days or face new sanctions. The US currency had its biggest five-day advance since March 21 after retail sales and factory output beat economists’ estimates.
“There’s some spillover of concerns coming from Ukraine and there’s an element of risk premium, so that’s why people are going into safer assets,” said Wong Chee Seng, a Kuala Lumpur-based currency strategist at AmBank Group. “The US data has helped to boost the dollar.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, dropped 0.2 percent this week to 115.55.
The New Taiwan dollar retreated 0.3 percent this week to NT$30.230 against the greenback in Taipei. On Friday, the US dollar rose against the NT dollar, gaining NT$0.009 to close at the day’s high as the local central bank picked up the greenback to help the currency recoup earlier losses, dealers said.
Turnover remained low as many investors stayed on the sidelines amid rising concerns over China’s growth after the world’s second-largest economy reported a sequential slowing down in the first quarter of this year, they said.
Foreign institutional buying in the local bourse also encouraged traders in the foreign exchange market to raise their NT dollar holdings, they said.
Meanwhile, South Korea’s won declined 0.2 percent to 1,037.58 and Malaysia’s ringgit fell 0.1 percent to 3.2405.
Financial markets in Hong Kong, Singapore, India, Indonesia and the Philippines were closed on Friday for the Easter holidays. In the shortened week of trading, India’s rupee fell 0.2 percent to 60.2910, the Indonesian rupiah dropped 0.1 percent to 11,420 and the Philippine peso declined 0.3 percent to 44.443.
Elsewhere in Asia, Thailand’s baht rose 0.3 percent to 32.184 per dollar, while Vietnam’s dong was little changed at 21,100. China’s yuan fell 0.21 percent to 6.2242.
The US dollar also posted weekly gains against the euro and the yen as improvements in economic data strengthened the case for the US Federal Reserve to remove stimulus this year.
“The jobless claims and Philadelphia Fed reports were both good, and the [US] dollar was bid on the back of that,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “If US jobs numbers stay positive, the Fed will probably continue to taper at the current pace.”
The US dollar climbed 0.5 percent this week to US$1.3813 per euro in New York, the biggest gain since the five days ended March 21. It strengthened 0.8 percent to ￥102.43, also the largest gain in four weeks, and touched ￥102.57 on Friday, the strongest level since April 8. The euro appreciated 0.2 percent this week to ￥141.45.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, rose 0.4 percent to 1,010.90 since April 11.
The pound advanced for a second week versus the US dollar after the UK jobless rate unexpectedly fell below 7 percent, the threshold the Bank of England has set to start considering raising interest rates.