Asian currencies posted their third weekly decline, led by Malaysia’s ringgit, amid concern a global bond rout and Greece’s deferral of debt payments would reduce investor demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.2 percent this week, as European Central Bank President Mario Draghi on Wednesday flagged faster euro-area inflation. Ten-year German bund yields climbed 40 basis points from May 29 as the rate on similar-maturity US Treasuries rose 23 basis points.
Investor attention turned to China as Janus Capital Group Inc’s Bill Gross said on Twitter that shares on the technology-heavy Shenzhen bourse were the next big trade for short sellers.
“The volatility in German bund yields drove global yields higher,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “That contributed to softer Asian currencies. Bill Gross’ statement that China stocks were the next big short affected market sentiment as well.”
The ringgit slid 1.5 percent against the US dollar to 3.719 this week, falling for a third week as crude prices slumped 5.8 percent from May 29. Malaysia derives 22 percent of state revenue from energy-related sources.
The New Taiwan dollar rose 1 percent on Friday to NT$31.032, but still dropped 0.5 percent this week because of foreign institutional selling in the local stock market and intervention by the central bank, dealers said.
Foreign funds sold a net US$1.2 billion of stocks this week through Thursday in Taiwan, Thailand, Indonesia and the Philippines, exchange data show.
The South Korean won fell 0.3 percent, while the Philippine peso retreated 0.6 percent and the Indonesian rupiah dropped 0.5 percent. Thailand’s baht declined 0.1 percent and China’s yuan dropped 0.07 percent. India’s rupee weakened 0.1 percent, while Vietnam’s dong was little changed.
The greenback also rallied to a 13-year high against the yen as US payrolls climbed last month, boosting the case for the US Federal Reserve to raise interest rates this year.
The US currency gained against most of its major peers after the jobs gain exceeded forecasts and worker pay gains accelerated. The Fed is likely to tighten monetary policy this year if the labor market improves further, Federal Reserve Bank of New York president William Dudley said in a speech in Minneapolis.
The US dollar advanced 1 percent to ¥125.63 as of 5pm in New York on Friday, after earlier reaching the highest level since June 2002. It added 1.1 percent to US$1.1114 per euro, paring a weekly loss to 1.2 percent.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 of its major peers, added 0.8 percent to 1,192.75.
US payrolls rose 280,000 last month, the most in five months, showing companies were upbeat about the US economy’s prospects after an early-year slump.
The US unemployment rate rose to 5.5 percent as more people entered the labor force.
The US dollar is up 5.4 percent this year, the second-best performer after the Swiss franc among 10 developed-nation peers, according to Bloomberg Correlation-Weighted Indexes. It is predicted to rise to US$1.05 against the euro, while weakening to ¥125 in the fourth quarter, according to median forecasts of analysts surveyed by Bloomberg.
The pound posted its worst weekly performance since the start of last month against the euro as European bond yields surged and added support to the common currency.
Sterling touched its weakest level in almost a month on Thursday amid a bond-market selloff that pushed German 10-year yields to their highest relative to UK government bonds in about four months.
The pound has dropped 1.3 percent since May 29. It strengthened 0.5 percent on Friday to £0.7277 per euro as of 5:04pm London time, after touching £0.7386 on Thursday, its weakest since May 8. Sterling fell 0.6 percent to US$1.5269.
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