The New Taiwan dollar completed a third weekly decline as signs of slower economic growth curbed inflows amid a boom in foreign-currency bond issuance.
Export orders fell for a third month last month, official data showed on Monday, while industrial production posted a second monthly drop. Corporates have sold US$2.5 billion of foreign-currency notes in Taiwan this month, with US$296 million of sales planned for next month.
Insurers buying these bonds use swaps to obtain other currencies, affecting the spot rate, Ta Chong Bank (大眾銀行) economist Woods Chen said.
“There’s demand for foreign currencies from insurers, and at the same time there aren’t a lot of inflows,” Chen said. “The drop in export orders shows stronger competition is pressuring prices lower.”
The NT dollar slid 0.7 percent, the biggest weekly decline since May 29, to NT$31.530 against the greenback, Taipei Forex Inc prices showed. It fell 0.3 percent on Friday.
Companies have sold US$22.7 billion of foreign-currency bonds this year, compared with US$24 billion for the whole of last year and US$1.8 billion in 2013. Such issuance has soared in Taiwan since a rule change excluded these notes from insurers’ overseas investment quota in May last year.
One-month non-deliverable forwards weakened 1 percent from July 17 to NT$31.433, data compiled by Bloomberg show. Global funds sold US$1.3 billion more local shares than they bought this month, exchange data show.
Across the region, Asian currencies extended the week’s loss as a gauge of Chinese manufacturing fell to a 15-month low, adding to concern that the region’s growth is slowing.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, dropped to its lowest level since 2010 and posted a third weekly decline.
China’s data follow a Thursday report that showed expansion in South Korea decelerated in the three months through June for a fifth quarter. A slump in commodity prices also weighed on exchange rates of Asia’s raw-material exporters, just as the U.S. prepares to raise borrowing costs.
“China is Asia’s largest economy and its slowdown has a spillover effect on the region’s outlook,” said Stella Lee, president of Success Wealth Management Ltd in Hong Kong. “A US rate hike looks set in stone, so that could trigger fund rotation from emerging markets to the U.S.”
Thailand’s baht led losses, falling 2.1 percent in its biggest weekly drop since 2007, data compiled by Bloomberg show. The baht weakened beyond 35 per US dollar on Friday for the first time since May 2009.
As the US prepares to tighten monetary policy, global investors sold a net US$1.5 billion of stocks and bonds in Thailand and South Korea this week, exchange data show. The won fell 1.8 percent.
In Malaysia, one-month ringgit forwards dropped for a fifth week, the longest stretch this year, amid falling oil prices that are eroding the nation’s export earnings. The spot rate was little changed from July 17 and is Asia’s worst-performing currency this year.
The Philippine peso dropped for a third week, falling 0.6 percent, and reached a five-year low against the US dollar on Friday.
Elsewhere this week, Indonesia’s rupiah declined 0.7 percent and touched the lowest level since the Asian financial crisis that roiled markets in 1997 to 1998.
India’s rupee was down 0.7 percent from July 17 in afternoon trading in Mumbai. China’s yuan and Vietnam’s dong were unchanged.
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