Asian currencies had their biggest weekly drop in more than a month as demand for the US dollar rose on the widening interest-rate gap with the euro.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.2 percent this week in the steepest drop since the period through Aug. 1. South Korea’s won and Malaysia’s ringgit led losses after an unexpected cut in the European Central Bank’s (ECB) benchmark rates. Improving US data are increasing the odds the US Federal Reserve will raise borrowing costs next year.
“The US dollar strength has spilled over in emerging Asian currencies,” said Jonathan Cavenagh, a Singapore-based foreign-exchange strategist at Westpac Banking Corp. “The strengthening US economy is creating expectations that US rates will rise sooner rather than later.”
The ringgit fell 1 percent this week to 3.1825 per US dollar in Kuuala Lumpur, data compiled by Bloomberg show. The won fell 1 percent to 1,024.25, Indonesia’s rupiah lost 0.5 percent to 11,755 and the Thai baht dropped 0.4 percent to 32.081. The Bloomberg Dollar Spot Index tracking the currency against 10 major peers touched a 13-month high.
In Taiwan, the NT dollar edged down 0.1 percent this week to NT$30.002.
The US dollar rose against the local currency on Friday, gaining NT$0.030 to close at the day’s high, as the central bank took advantage of the weakness of other regional currencies to push down the local unit at the end of the session, dealers said.
It was the first time the US dollar closed above the NT$30 mark since Aug. 26, when it ended at NT$30.026.
Market sentiment remained cautious ahead of the release of US non-farm payroll data scheduled for later in the day in the hopes of gaining a better understanding about the US economy, dealers said.
ECB President Mario Draghi lowered the benchmark refinancing and deposit rates on Thursday to 0.05 percent and minus-0.2 percent respectively, weakening the euro 1.6 percent in the biggest drop since November 2011.
US Fed Chair Janet Yellen told central bankers in Jackson Hole, Wyoming, last month that US policymakers might raise interest rates sooner than investors anticipate amid labor- market gains.
“The euro-dollar moved so much, obviously you will have a reaction in dollar-Asia,” said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. “Once the market digests the big euro-dollar move, next week we’ll see Asian currencies being supported.”
The won completed its biggest weekly loss in more than a month before the three-day Chuseok holiday starting Sept. 8.
“The globally strong [US] dollar triggered by the ECB meeting will affect the won,” said Park Daebong, a Seoul-based currency trader for Nonghyup Bank.
Elsewhere in Asia this week, the Philippine peso declined 0.1 percent to 43.662 per dollar, while China’s yuan strengthened 0.03 percent to 6.1412, India’s rupee rose 0.1 percent to 60.445 and the Vietnamese dong was steady at 21,195.
Draghi’s unprecedented easing policies also sent the euro on the longest weekly losing streak in the shared currency’s 15-year history. The European currency dropped 1.4 percent to US$1.2951 this week in New York trading and touched US$1.2920, the lowest level since July last year. The eight-week losing streak is the longest since the euro began trading in 1999.
The euro fell for a second week against the yen, declining 0.4 percent to ¥163.11.
The yen depreciated 1 percent to ¥105.09 and reached ¥105.71, the weakest level since October 2008.
Sterling was the biggest loser among the US currency’s 31 major counterparts. The pound dropped 1.6 percent to US$1.6327 as the Bank of England kept its policy rate unchanged at 0.5 percent and amid signs Scotland’s independence vote on Sept. 18 would be more closely contested than previously indicated.
The Australian dollar was the biggest winner, gaining 0.42 percent to US$0.9378.
The Bloomberg Dollar Spot Index rose for a third week, touching 1,041.58, the highest level since July last year.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last