Asian currencies recorded their biggest weekly drop in four years as China’s surprise yuan devaluation deepened concerns about a slowdown in the world’s second-biggest economy.
Malaysia’s ringgit and Indonesia’s rupiah sank to 17-year lows and stock markets across the region tumbled after the People’s Bank of China cut the yuan’s reference rate by 1.9 percent on Tuesday, triggering its biggest decline in two decades.
The move came days after data showed Chinese exports shrank for a fifth month last month, adding pressure on exchange rates that were already depreciating amid signs the US Federal Reserve will raise interest rates for the first time in a decade.
“The primary reason for weaker Asian currencies has been the one-off devaluation of the Chinese yuan and the subsequent depreciation,” Singapore-based Societe Generale AG head of Asia currency strategy Jason Daw said. “We expect further downward pressure leading up to expected Fed tightening.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, retreated 2.1 percent from Friday last week, its biggest weekly drop since September 2011.
The New Taiwan dollar fell 1.9 percent to NT$32.368 to the US dollar this week.
The ringgit slumped 3.8 percent, the yuan sank 2.8 percent, the rupiah fell 1.8 percent, and India’s rupee weakened 2.1 percent. Vietnam’s dong slid 1.3 percent after the central bank widened the currency’s trading band on Wednesday.
The yuan recorded its steepest two-day fall since 1994 following devaluation, before the declines eased as China’s central bank signaled support for the currency and amid speculation the authorities intervened to limit its slide.
The rupiah plunged to 13,831 to the US dollar on Wednesday, the weakest since July 1998, after Indonesian President Joko Widodo named a former central bank chief as economy minister in a Cabinet revamp aimed at boosting growth.
The ringgit also sank to a 17-year low this week, sliding beyond 4 per dollar as investors shrugged off better-than-expected economic data to focus on a drop in energy prices that’s cutting earnings for Malaysia, a net oil exporter.
Malaysia’s GDP rose 4.9 percent last quarter from a year earlier, more than the 4.5 percent median estimate in a Bloomberg survey, data showed on Thursday.
The current-account surplus narrowed to 7.6 billion ringgit (US$1.9 billion) from 10 billion ringgit, but beat the forecast 6.1 billion ringgit.
“With oil prices lower overnight and the market looking past yesterday’s better Malaysian second-quarter GDP and current-account numbers, ringgit remains vulnerable,” Singapore-based Australia & New Zealand Banking Group Ltd strategist Khoon Goh said.
Elsewhere in Asia, the Philippine peso declined 1.1 percent and Thailand’s baht weakened 0.4 percent.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS