Asian currencies completed their biggest weekly decline in three months as data signaling a strengthening US recovery boosted demand for the greenback.
Second-quarter growth in the world’s largest economy topped the median estimate in a Bloomberg survey and a jobless claims average fell to an eight-year low, reports showed this week.
The Bloomberg Dollar Spot Index gained 0.9 percent in the past five trading days, the most since November last year, as the US and Europe stepped up pressure on Russia over Ukraine and as Standard & Poor’s declared Argentina in default on a debt payment.
“Asian currencies are increasingly succumbing to [US] dollar strength,” said Mitul Kotecha, a head of Asia-Pacific foreign exchange strategy at Barclays PLC.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies, excluding the yen, fell 0.4 percent from July 25 in Hong Kong.
In Taipei, the New Taiwan dollar fell 0.1 percent to close at NT$30.069 on Friday, compared with NT$30.035 on July 25.
The US unit rose against the NT dollar on Friday, gaining NT$0.029 to close at the day’s high amid cautious sentiment ahead of the release of the US non-farm payroll data for last month, dealers said.
The central bank took advantage of the weakness of other regional currencies against the greenback, in particular that of the won, to sell the NT dollar in the latter part of the session and vault the greenback back to the NT$30 mark at the close, the dealers said.
The US dollar opened higher over follow-through buying from a session earlier, but soon fell into the red as exporters rushed to sell their greenbacks, they added.
After the greenback fell below NT$30, the central bank’s intervention became more visible as it bid to push the currency back up to that level and keep Taiwan-made products cheaper in the global market, the dealer said.
The won, which fell 0.91 percent against the greenback at one point, prompted traders to think that the central banks in Taipei and Seoul could launch a depreciation competition to maintain strength in the global market, they said.
The South Korean unit dropped 1.1 percent in the past five days to 1,037.10 per US dollar.
The falling won largely reflected optimism toward the US’ economy, particularly after it reported 4 percent annual GDP growth for the second quarter, the dealers said.
Elsewhere in Asia, the rupee weakened 1.8 percent for the week and reached a three-month low of 61.1900 per US dollar on Friday.
The baht and the ringgit each fell 1.2 percent to 32.230 and 3.2133 per US dollar respectively. Markets in Malaysia were shut on Monday and Tuesday, while Indonesia’s were closed this week for the Eid al-Fitr holiday.
The baht posted its biggest five-day decline this year after reaching an eight-month high of 31.740 per greenback on July 23. Thailand recorded a current account surplus of US$1.8 billion in June — the first excess in three months — after imports fell 14.1 percent from a year earlier, data showed on Thursday.
The Philippine peso slid 1.1 percent to 43.685 per US dollar, its biggest weekly drop in four months. The Philippine central bank hiked the rate it pays lenders for overnight deposits to 3.75 percent from a record-low 3.5 percent on Thursday.
Elsewhere in the region, China’s yuan strengthened 0.19 percent to 6.1798 and Vietnam’s dong was steady at 21,230.
The US dollar rose the most in six months versus a basket of peers after economic reports showed US growth rebounded, boosting bets that the US Federal Reserve is to raise interest rates next year.
The greenback touched an eight-month high against the euro amid slowing inflation in Germany and the eurozone.
Emerging market currencies declined as Standard & Poor’s deemed Argentina in “selective default,” and the US and EU imposed further sanctions on Russia for its support of rebels in eastern Ukraine. The European Central Bank is forecast to hold its main rate at a record low when it meets next week.
HSBC Holdings PLC forecasts that the greenback will strengthen against the pound, with the next target past US$1.6800.
The Bloomberg Dollar Spot Index added 0.7 percent this week, the most since the five-day period ending on Jan. 17. It touched 1,023.42, the highest since March 20.
The euro was little changed on the week at US$1.3427 after touching US$1.3367, its lowest level since Nov. 12 last year, while the yen fell for a third week, losing 0.8 percent to ¥102.61. It fell 0.7 percent to ¥137.78 per euro.
In London, the pound fell a fourth week against the greenback, slipping 0.9 percent to US$1.6821, to post its longest losing streak in more than a year, as UK economic data was weaker than predicted.
Sterling depreciated against the euro for the first week since the period ended on July 11, weakening 0.9 percent to £0.7980 per euro, the steepest weekly fall since the period ended on Feb. 21.
Argentina’s peso dropped for a 14th week after Buenos Aires missed a US$539 million interest payment amid wrangling over a court order to pay hedge funds that hold debt from the country’s 2001 default. Fitch Ratings cut Argentina’s foreign debt rating on Thursday, after S&P did so a day earlier.
The Argentine peso fell 0.7 percent this week, extending the longest losing streak since it depreciated for 100 consecutive weeks ending on Jan. 31.
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