Indonesia’s rupiah and the South Korean won led gains in Asian currencies this week, as investors pushed back bets for higher US interest rates, reducing demand for the greenback.
The Bloomberg Dollar Spot Index fell for a second week in the first back-to-back decline since June as futures showed traders on Thursday trimmed bets that the US Federal Reserve will raise its benchmark rate by September next year from 78 percent odds on Sept. 30, to a 39 percent chance.
That day, St Louis Fed Bank President James Bullard said the central bank should consider delaying the end to its bond-buying program over concern that slowing growth in the rest of the world will weigh on the US recovery.
In Taipei, the New Taiwan dollar was little changed this week and closed at NT$30.421 against its US counterpart, prices from Taipei Forex Inc show.
The US dollar rose against the Taiwanese unit on Friday, gaining NT$0.011 to, as foreign investors moved their funds out of the country, pushing up demand for the greenback, dealers said.
Heavy selling by foreign institutional investors also added downward pressure on the local currency, as did the weakness of regional currencies, they said. The declining won, which fell by as much as 0.53 percent against the US dollar on the day, and a move by the People’s Bank of China to cut the yuan reference rate convinced traders to sell, dealers said.
The US dollar’s momentum was sustained by foreign investors’ repatriation of funds to meet demand in their home markets, amid volatility in global equity markets, dealers said. It rose even higher when foreign institutional investors moved to dump their holdings in local blue chips, in particular in the electronics sector, resulting in more selling of the NT dollar, they said.
In Jakarta, the rupiah rose 1 percent this week to 12,108 as Indonesian president-elect Joko Widodo, who has pledged to cut fuel subsidies and boost economic growth to at least 7 percent a year, prepared to be inaugurated on tomorrow.
Elsewhere in Asia, Vietnam’s dong fell 0.1 percent to 21,245 this week, the won rose 0.4 percent to 1,065.80 and Thailand’s baht appreciated 0.4 percent to 32.377, prices compiled by Bloomberg show. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most traded currencies excluding the yen, climbed 0.2 percent.
“We need to see what the Fed actually does in its October meeting and the market is still cautious,” said Ju Wang, Hong Kong-based strategist at HSBC Holdings PLC. “In a very risk-off and high-volatility environment, the North Asia[n] currencies tend to outperform due to less reliance on foreign funding.”
The yuan rose for a second week, strengthening 0.11 percent to 6.1240 versus the US dollar, after reporting exports that exceeded economists’ estimates.
Shipments from the world’s second-largest economy increased 15.3 percent from a year earlier last month, recording the best performance since February last year and topping the 12 percent median estimate in a Bloomberg survey.
The yuan is the sole gainer among the 24 emerging market currencies tracked by Bloomberg in the past three months. A US Treasury Department report this week said China has shown “some renewed willingness” to let the yuan rise, while adding that the currency “remains significantly undervalued.”
Malaysia’s ringgit, the Philippine peso and India’s rupee were Asia’s worst performers this week, as global funds pulled a net US$2.3 billion this week from stocks in Taiwan, India, Indonesia, the Philippines, South Korea and Thailand, exchange data show.
The ringgit led losses, falling 0.5 percent to 3.2740 per US dollar. Malaysian Prime Minister Najib Razak increased fuel prices on Oct. 2 and announced in last week’s budget that a 6 percent sales tax would be implemented in April.
The rupee dropped 0.2 percent to 61.44 versus the greenback as official data showed India’s trade deficit widened to US$14.2 billion last month, the most since May last year. The peso posted a seventh weekly loss, its longest run of declines since 2008, falling 0.3 percent to 44.912.
The US dollar weakened for a second consecutive week for the first time since June as traders pushed out expectations for the US Fed’s interest rate increases to the end of next year.
A gauge of expectations for volatility reached an eight-month high as investors fretted about the prospects for global growth, US monetary policy and the spread of Ebola. The yen rallied against most major currencies and rose to the strongest against the greenback in more than five weeks as investors sought a refuge.
The Bloomberg Dollar Spot Index, which measures the currency against a basket of 10 major counterparts, fell 0.6 percent to 1,063.64 this week in New York.
The greenback fell 1.1 percent to US$1.2761 per euro in its biggest weekly drop in six months, while the yen rose 0.7 percent to ¥106.88 per US dollar and hit ¥105.23 on Thursday, the strongest level since Sept. 8. Europe’s single currency climbed 0.3 percent to ¥136.38.
In London, sterling ended the week at US$1.6087. The pound fell 1 percent to £0.7934 per euro, the steepest decline since February.
Bank of England official Martin Weale, who voted for rate hikes in August and last month, on Wednesday said it might be hard for the bank to address “very low” inflation.
Minutes of the bank’s Oct. 9 policy meeting will be published next week, when data is to show the UK economy grew an annual 3 percent in the third quarter, down from 3.2 percent in the prior three months, analysts polled by Bloomberg said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
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