Led by the won, Asian currencies fell for a fourth time this week, as Japan’s record monetary stimulus drove down the yen and the prospect of higher US borrowing costs buoyed the greenback.
The Bloomberg-JPMorgan Asia Dollar Index lost 0.2 percent from Nov. 14 as the Bank of Japan kept monetary easing it expanded last month, pushing the yen to a seven-year low against the US dollar. Minutes of the US Federal Reserve’s meeting last month showed officials discussed the need to clarify the probable pace of raising interest rates next year, damping demand for emerging market assets.
The won fell 1.2 percent this week to 1,113.76 per US dollar in Seoul, data compiled by Bloomberg show, while the New Taiwan dollar declined 0.8 percent to NT$31.005 and the yen fell 1.4 percent.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, advanced 0.7 percent from a week ago.
As the yen slid to ¥118.98 per US dollar on Friday — its weakest level since August 2007 — the Taiwanese currency weakened beyond NT$31 against the greenback for the first time since 2010 to decline for a fourth week on the back of concern that a weak yen will make the island’s exports less competitive against Japanese goods.
The NT dollar ended the session little changed, rising NT$0.10 as the yen rebounded 0.3 percent to ¥117.87 per US dollar after Japanese Finance Minister Taro Aso said its drop has been too fast.
Aso’s comments were perceived as the strongest warning yet against the yen’s free-fall after the Bank of Japan injected funds into the market to boost the economy.
With the US dollar falling below the NT$31 mark, the central bank’s intervention seemed more visible, helping the currency return to that level at the end of the session, dealers in Taipei said.
To protect local exporters, the central bank is expected to maintain its efforts to keep the greenback above NT$31 in the short term, they added.
Global funds bought US$851 million more Taiwanese stocks than they sold during the week, limiting losses in the local unit.
“This wave of depreciation was entirely because Taiwan’s dollar was following the yen,” Taipei Fubon Commercial Bank Co (北富銀) economist Cindy Yu (尤敏君) said. “Taiwan’s economic fundamentals are good and foreigners have been buying local stocks. The yen may stop depreciating continuously, so there’s a chance Taiwan’s dollar may stop falling in the short term.”
The NT dollar’s weekly drop took its monthly decline to 1.7 percent, Taipei Forex Inc prices show.
“The yen needs to stabilize before Taiwan’s dollar can stop depreciating,” KGI Securities Investment Advisory Co Ltd (凱基證券投顧) president Chu Yen-min (朱晏民) said on Friday.
The won completed a fourth five-day loss this week to record its longest run of declines since May last year, amid speculation that South Korea will seek to weaken the exchange rate to counter the economic impact of a falling yen.
Bank of Korea Governor Lee Ju-yeol on Tuesday said that authorities are aware of the yen’s adverse impact and will act to stabilize the market if needed.
Elsewhere in Asia this week, India’s rupee dropped 0.2 percent to 61.8475, the ringgit weakened 0.2 percent to 3.3552, the Philippine peso lost 0.1 percent to 44.975 and the baht was at 32.810 versus 32.800 on Nov. 14. Also, Indonesia’s rupiah rose 0.5 percent to 12,150, China’s yuan advanced 0.09 percent to 6.1249 and Vietnam’s dong depreciated 0.2 percent to 21,375.
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