Asian currencies fell this week, led by the Indonesian rupiah’s drop to a four-year low, on concern signs of a US economic recovery would support a reduction in stimulus that has fueled emerging-market inflows.
US service industries grew last month at the fastest pace in almost eight years, strengthening the case for tapering when the US Federal Reserve meets on Sept. 17 and 18 to review its bond-buying program. Barclays PLC says yields on 10-year US Treasuries, which touched a two-year high, will lure investors, as exchange data show global funds pulled US$141 million from Indian, Indonesian, Philippine and Thai stocks this week.
Asian markets closed on Friday before a report showed US payrolls rose less than expected, easing concern about the size of potential cuts to Fed bond purchases.
“The battle, which all currencies in Asia are facing, is rising US Treasury yields and the Fed meeting later in the month,” said Hamish Pepper, a currency strategist at Barclays in Singapore. “Ultimately, that’s going to cap any appreciation in Asian currencies in the near term.”
The rupiah declined 2.3 percent this week to 11,175 per US dollar and reached a four-year low of 11,205 earlier, prices from local banks show. Indonesia’s trade deficit reached a record US$2.3 billion in July, as exports fell on lower global commodity prices, official data showed on Monday. The nation’s current-account shortfall should narrow in the third quarter, from about 4.4 percent of GDP in the previous three months as a slowing economy and higher fuel prices curb imports, Indonesian Finance Minister Chatib Basri said in an interview on Thursday.
The New Taiwan dollar bucked the downtrend by gaining 0.3 percent to NT$29.90 this week, as foreign investors continued moving funds in to pick up bargains in the local bourse, dealers said.
The losses suffered by the greenback were capped by central bank intervention aimed at slowing the pace of the NT dollar’s appreciation and strengthening the country’s global competitiveness, the dealers said.
Malaysia’s ringgit weakened 1.3 percent to 3.3290 against the US dollar and the Thai baht retreated 0.7 percent to 32.380.
Morgan Stanley lowered its growth forecasts for this year and next for the four largest Southeast Asian economies of Indonesia, Malaysia, Singapore and Thailand, citing a weaker-than-expected first half and an uncertain outlook, Singapore-based economist Deyi Tan wrote in a note on Tuesday.
The Bloomberg-JPMorgan Asia Dollar Index climbed 0.2 percent this week to 114.45, as aside from the NT dollar, the South Korean won rallied 1.6 percent to 1,092.93 per US dollar.
Elsewhere in Asia, China’s yuan was little changed this week at 6.1205 per US dollar, the Philippine peso climbed 0.3 percent to 44.475 and Vietnam’s dong rose 0.1 percent to 21,125.
The US dollar gained versus the euro and yen on speculation about the Fed’s tapering. The greenback reached an eight-week high versus the 17- nation currency as the prospect for US intervention in Syria increased demand for safer assets. The US currency pared gains versus the euro and the yen on Friday after US employers added fewer workers than forecast last month, even as surveys showed economists’ retained Fed taper projections.
The dollar gained 0.3 percent to US$1.3178 per euro this week in New York, after reaching US$1.3105, its strongest since July 19. It climbed 1 percent to ￥99.11 after rallying beyond ￥100 and touching the highest since July 25. Japan’s currency dropped 0.6 percent to ￥130.63 per euro.
The Bloomberg US Dollar Index, which tracks the greenback against 10 other major currencies, depreciated 0.3 percent to 1,031.35.
Sterling rose for the first time in three weeks against the US dollar on slower-than-expected US job gains last month. Sterling rose 0.8 percent against the US dollar in the week to US$1.5631. It also appreciated 1.3 percent to ￡0.8423 per euro.