Malaysia’s ringgit and the Philippine peso led losses in Asian currencies this week on the back of bets that an improving US economy would prompt the US Federal Reserve to further cut its stimulus, which has buoyed emerging markets.
The Bloomberg-JPMorgan Asia Dollar Index halted a three-week gain as US jobless claims dropped to their lowest level since November last year and retail sales beat economists’ estimates, official data showed this week.
Asian currencies are poised to extend declines on concern that an increase in Chinese borrowing costs and a weak yen will threaten growth in the region, according to JPMorgan Chase & Co.
The Asia Dollar Index, which tracks the region’s 10 most active currencies, fell 0.3 percent this week.
In Taipei, the New Taiwan dollar was little changed this week, ending at NT$30.221 compared with NT$30.212 on Jan. 10.
On Friday, the greenback fell against the NT dollar for the third consecutive session, shedding NT$0.035 as exporters sold the US currency in exchange for its local counterpart to meet fund demands ahead of the Lunar New Year holiday, dealers said.
The strength of the won and the yuan also put downward pressure on the US dollar, while foreign institutional buying in the local bourse boosted demand for the Taiwanese currency, they said.
As it has done recently, the central bank jumped into the trading floor in the late session to slow down the NT dollar’s appreciation before trading closed, they added.
Ahead of the central bank’s move, foreign institutional investors bought a net NT$5.35 billion (US$177 million) worth of shares on the Taiwan Stock Exchange, a move that boosted selling in the greenback, dealers added.
Exporters are expected to continue buying the Taiwanese currency before the holiday starts on Jan. 30 to maintain the local unit’s strength, which could spark intervention from the central bank at a time when many local business leaders have urged depreciation, dealers said.
US dollar selling was also sparked by a rise in the won, while a stronger yuan served as another indication for traders to raise their NT dollar holdings after the People’s Bank of China raised the reference rate for the yuan in exchange for the greenback, they said.
The yuan closed at 6.0502 this week, compared with 6.0521 at the end of last week.
China’s money market rates jumped last month to a six-month high, raising concern that tighter lending conditions may slow the world’s second-largest economy.
Meanwhile, the yen’s 14 percent decline over the past 12 months is fueling speculation that the weaker currency may help Japanese companies grab overseas market share from competitors in South Korea and Taiwan.
Elsewhere in Asia, the Philippine peso weakened 0.7 percent in the past five days to 45.015 per US dollar, according to prices from Tullett Prebon PLC, while the ringgit dropped 0.8 percent to 3.2977 as of Thursday, according to prices compiled by Bloomberg. Malaysian financial markets were shut on Friday for a holiday.
Elsewhere in Asia, the won rose 0.2 percent this week to 1,059.63, Thailand’s baht gained 0.5 percent to 32.855, the rupiah advanced 0.6 percent to 12,090 and India’s rupee climbed 0.6 percent to 61.5500.
The US dollar rose to its highest level since September last year, as positive data from there helped offset disappointing unemployment figures released a week ago.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major counterparts, rose 0.8 percent this week to 1,032.39 and touched 1,032.84 on Friday, the highest since Sept. 9 last year.
The greenback rose 0.9 percent to US$1.3541 per euro this week, while gaining 0.1 percent to ￥104.32, as the euro fell 0.8 percent to ￥141.25.
The pound strengthened against the euro this week as a government report showed UK retail sales grew at a record pace last month.
The British currency rose 0.5 percent this week to ￡0.8248 per euro on Friday, after appreciating to ￡0.8231 on Jan. 9 — the strongest level since last January — while weakening 0.3 percent against the greenback to US$1.6433.
The pound has appreciated at least 2 percent against its major counterparts in the past six months.