Sun, Sep 21, 2014 - Page 15 News List

Asian currencies retreat on prospect of higher US rates

Bloomberg and staff writer, with CNA

Asian currencies dropped for a third week, the longest run of losses since January, as the prospect of higher US interest rates dimmed the appeal of emerging-market assets.

Indonesia’s rupiah and Malaysia’s ringgit led the declines after the US Federal Reserve on Wednesday raised by 25 basis points its median estimate for where the federal funds rate would be by the end of next year, while pledging to keep it near zero for a “considerable time.”

Global funds pulled a combined US$1 billion from stocks in Indonesia, South Korea, Taiwan, India and the Philippines this week. Scotland voted to stay in the UK in a referendum on independence.

“The key concern is capital outflows from Asia to the US,” Ho Woei Chen, an economist at United Overseas Bank Ltd in Singapore, said on Friday. “The US could raise interest rates at a faster pace than expected.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks 10 regional currencies excluding the yen against the greenback, fell 0.2 percent this week to 115.78.

The New Taiwan dollar depreciated 0.6 percent this week to NT$30.258 against its US counterpart on Friday. It shed NT$0.002 from Thursday, on expectations of higher interest rates in the US, dealers said.

Institutional selling in the local bourse added downward pressure on the NT dollar, they added. However, gains posted by the Chinese yuan helped the NT dollar fend off some selling and limit the upturn enjoyed by the US dollar.

The rupiah dropped 1.3 percent from Sept. 12 to 11,968 per US dollar in Jakarta and the ringgit weakened 1.1 percent to 3.2340.

The Philippine peso declined 1.2 percent to 44.43 on Thursday, before the country’s financial markets were shut on Friday due to rain and flooding.

South Korea’s won fell 0.9 percent this week in the longest run of losses since May last year, and dropped 0.2 percent on Friday to 1,044.70 per US dollar in Seoul, data compiled by Bloomberg show.

In Shanghai, the yuan fell 0.1 percent this week to 6.1415 per US dollar, China Foreign Exchange Trade System prices show.

Elsewhere in Asia, India’s rupee fell 0.3 percent to 60.8275. Thailand’s baht gained 0.1 percent to 32.20, while Vietnam’s dong was little changed at 21,205.

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