Asian currencies completed a weekly loss, led by the Singapore dollar and Malaysia’s ringgit, as the US dollar climbed amid speculation the US Federal Reserve is on track to raise interest rates this year.
Fed officials remain open to tightening this year, though a June liftoff in rates is unlikely, according to the minutes of their April meeting released on Wednesday.
A preliminary gauge of manufacturing in China, Asia’s biggest economy, missed estimates this month even after borrowing costs were cut for the third time since November.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.2 percent from May 15 at 4:40pm in Hong Kong. The ringgit weakened 0.6 percent, Singapore’s dollar lost 0.7 percent, Indonesia’s rupiah dropped 0.5 percent, while South Korea’s won declined 0.4 percent.
A gauge of the US dollar jumped 1.6 percent, snapping a five-week decline.
Bucking the trend was the New Taiwan dollar, which rose 0.4 percent on Friday and 0.2 percent from the previous week.
“The [US] dollar recovered as an increase in Fed rates may be likely in September,” said Leong Sook Mei, the Singapore-based Southeast Asia head of global markets research at Bank of Tokyo- Mitsubishi UFJ Ltd.
Fed policymakers expect US growth to pick up after stalling in the first quarter, the minutes showed. The average number of Americans filing for unemployment benefits over the past four weeks dropped to a 15-year low, a sign the labor market continues to strengthen.
China’s preliminary purchasing managers’ index (PMI) from HSBC Holdings PLC and Markit Economics was at 49.1 for this month, missing the median estimate of 49.3 in a Bloomberg survey. Numbers below 50 indicate contraction. Manufacturing output slipped to a 13-month low, the PMI report showed on Thursday, while employment continued to shrink.
“Chinese data was very disappointing,” said Andy Ji, a strategist at Commonwealth Bank of Australia in Singapore. “The market was expecting some kind of stabilization because of the interest-rate and reserve-ratio cuts.”
The ringgit fell as Brent crude prices retreated 0.8 percent this week, weighing on the outlook for Malaysia, the only major Asian oil-exporting nation.
Elsewhere in Asia, the Philippine peso declined 0.1 percent this week, while India’s rupee was little changed. Thailand’s baht climbed 0.4 percent and the Chinese yuan rose 0.1 percent.
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