Sun, Oct 05, 2014 - Page 15 News List

Asian currencies drop for fifth week on US rate jitters

Bloomberg

Asian currencies fell for a fifth week, the longest losing streak in 18 months, as the prospect of higher US interest rates sapped demand for emerging-market assets at a time when China’s economy is sputtering.

The Bloomberg-JPMorgan Asia Dollar Index declined 0.3 percent this week and on Wednesday sank to its lowest level since March. South Korea’s won led losses in the region with a 1.6 percent slide versus the greenback, while India’s rupee and Indonesia’s rupiah dropped more than 0.7 percent. The offshore yuan decreased the most in more than three months in Hong Kong amid pro-democracy protests in the territory. Financial markets in China, India and South Korea were shut for holidays on Friday.

The New Taiwan dollar dropped for a fifth week in the longest run of declines since January, after overseas investors pulled funds from local stocks in preparation for higher US interest rates. The NT dollar fell 0.4 percent this week to NT$30.437 against its US counterpart.

Global funds sold US$866 million more Taiwanese equities than they bought this week, Taiwan Stock Exchange data showed, adding to net sales of US$1.8 billion over the prior three weeks.

“As we get closer towards eventual rate increases in the US, this is causing Asian currencies to depreciate against the [US] dollar,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group in Singapore. “Ongoing concern over Chinese growth is also a factor. The divergence in growth momentum between the US and Asia suggests we could see further Asian currency depreciation to come.”

The yuan fell 0.2 percent this week in Shanghai to close at 6.1395 per US dollar on Sept. 30, before a weeklong holiday in China. The offshore yuan dropped 0.26 percent and Hong Kong’s dollar was little changed at 7.7587. Hong Kong’s government said on Friday its main office complex is closed after students strengthened barricades around the building that’s been the focus of protests for at least a week.

Malaysia’s ringgit rose 0.1 percent from Sept. 26, snapping a run of four weekly declines, as the government increased fuel prices for the first time in more than a year to narrow the budget deficit.

Elsewhere in the region, the Philippine peso lost 0.1 percent and Thailand’s baht dropped 0.6 percent. The Vietnamese dong declined 0.4 percent, its biggest decrease since June.

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