China’s slowing economy, falling commodity prices and a looming US interest-rate increase all took their toll on Asian currencies this week, with South Korea’s won and the Malaysian ringgit leading the losses.
Chinese data issued during the week reaffirmed that six rate cuts in the past 12 months are failing to revive growth in South Korea’s biggest trading partner.
As the world’s second-largest economy slows, it is crimping demand for raw materials to the detriment of countries like Malaysia, the only major net oil exporter in Asia.
Brent crude has plunged 6.3 percent so far this week to the lowest level since August.
“The main driving force for the currency weakness is the general resumption of dollar strength and the solidification of expectations of a Federal Reserve rate hike next month,” Singapore-based Barclays PLC head of foreign-exchange and interest-rate strategy Mitul Kotecha said. “The stability in October is giving way to renewed fears about global growth, China’s growth engine and commodity price weakness.”
The won slid 1.9 percent from Nov. 6 and the ringgit dropped 1.4 percent.
Indonesia’s rupiah retreated 0.8 percent and India’s rupee lost 0.6 percent.
The US dollar rose against the New Taiwan dollar on Friday, gaining NT$0.008 to close at the day’s high of NT$32.908 in thin trading on cautious sentiment ahead of the release of US retail sales data for last month, dealers said.
Taiwan’s central bank stepped in, as it has done in almost every session recently, to prop up the US dollar and help the currency recoup its earlier losses at a time when Taiwanese exporters are anxious to gain a larger share in the global market, they said.
It was the seventh consecutive session in which the US dollar appreciated against the NT dollar.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, declined 0.3 percent this week.
The gauge last month posted its biggest monthly rally since 2012 as bets for a US rate increase receded.
It has dropped 1 percent so far this month as odds for a Fed hike this year rose to 66 percent from 50 percent, according to futures contracts.
As the US prepares to raise borrowing costs, the Bank of Korea kept its benchmark rate at a record-low 1.5 percent on Thursday, as did policymakers in the Philippines, who held their key rate at 4 percent.
Earlier in the month, both Malaysia and Thailand stood pat at 3.25 percent and 1.5 percent respectively.
“Attention is all on what will happen to foreign investor flows to Korean markets when the US raises rates,” Seoul-based Dongbu Securities Co currency and fixed-income analyst Yuna Park said.
Elsewhere in Asia this week, the yuan fell 0.3. The Philippine peso, Thailand’s baht and the Vietnamese dong weakened 0.3 percent.
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