Asian currencies fell this week by the most since July as a slide in the yen fanned concern regional central banks would intervene to prevent exchange-rate gains that might hurt exports.
Officials from Russia to Thailand have voiced concern that Japan’s intention to weaken the yen will stoke competitive devaluations. The Bloomberg-JPMorgan Asia Dollar Index retreated from a 16-month high as the yen dropped for an 11th week.
“The authorities are getting more uncomfortable with sharp appreciation against the dollar and the yen,” said Wee-Khoon Chong, a Hong Kong-based strategist for Societe Generale SA.
The uncertainty surrounding global growth, currency gains and the risk of intervention are prompting retreats in regional currencies, he said.
The Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, fell 0.6 percent this week after touching 118.89 on Jan. 18, the highest level since September 2011.
NT DOLLAR SLIDES
Taiwanese Premier Sean Chen (陳?) asked the central bank and Ministry of Economic Affairs to closely monitor the effects of the Bank of Japan’s monetary easing measures aimed at weakening the yen. The New Taiwan dollar fell 0.7 percent this week to N$29.25 against the greenback, the most since the five days to June 1.
The won declined 1.6 percent to 1,074.05 per US dollar in Seoul, according to data compiled by Bloomberg. The Thai baht dropped 0.6 percent to 29.91 and the Philippine peso lost 0.2 percent to 40.658.
The baht ended a seven-week rally, the won slumped by the most since May and Malaysia’s ringgit had its worst week since June. South Korean authorities have sold the won this month and Taiwan’s central bank did the same on most days in the past nine months, according to traders.
The won fell as overseas investors pulled US$990 million from South Korean stocks this week as the government hinted at more measures to curb appreciation. South Korean Finance Minister Bahk Jae-wan said on Wednesday that gains in the won were too steep after the currency extended last year’s advance to reach a 17-month high of 1,054.49 per US dollar on Jan. 15.
The euro rose to its highest against the US dollar in 11 months as the European Central Bank (ECB) said banks would hand back a greater amount of three-year loans than analysts estimated, boosting short-term borrowing costs.
The euro gained for a seventh week against the yen as the ECB said 278 banks would repay 137.2 billion euros (US$184.4 billion) this week, versus an 84 billion euro forecast in a Bloomberg survey.
The euro gained 0.7 percent to US$1.3464 at 5pm in New York and touched US$1.3479, the strongest level since Feb. 29. It advanced 1.1 percent this week. Against the yen, the euro appreciated 1.2 percent to ￥122.32 and reached ￥122.77, the highest since April 11, 2011.
The yen dropped in a record weekly losing streak versus the US dollar as Japan’s consumer prices fell. The government said consumer prices excluding fresh food fell 0.2 percent last month from a year earlier. The central bank announced open-ended asset purchases and a 2 percent inflation target this week.
The yen was down 0.6 percent to ￥90.91 per US dollar after depreciating as much as 1 percent to ￥91.19, the weakest level since June 2010. It dropped for an 11th straight week, the longest losing streak in data compiled by Bloomberg.
Sterling fell against the euro after a report showed Britain’s economy shrank 0.3 percent in the fourth quarter. The pound lost 0.6 percent to ￡0.8519 per euro and touched ￡0.8537, the weakest level since December 2011.