Asian currencies completed their best week in two months, led by the Philippine peso and the Thai baht, as improvements in US economic data eased concern that global growth is slowing.
The Bloomberg JPMorgan-Asia Dollar Index halted a three-week slide to advance 0.3 percent after reports showed US jobless claims fell more than economists estimated and the nation’s services industry expanded.
Emerging-market currencies had their worst start to a year since 2008 following a rout in Turkey’s lira and a devaluation in Argentina’s peso, as the US Federal Reserve pressed ahead with a plan to slow the pace of its monthly bond purchases by US$10 billion.
“The selloff is clearly overdone, and there’s a need to distinguish the good and bad ones within the EM [emerging-market] bloc,” said Roy Teo, a Singapore-based currency strategist at ABN Amro Bank NV. “The recovery remains fragile given the headwinds from Fed tapering concerns.”
The peso climbed 0.7 percent to 44.99 per US dollar in Manila, according to Tullett Prebon PLC prices. Thailand’s baht added 0.7 percent to 32.80, while the ringgit advanced 0.5 percent to 3.33 versus the greenback, according to data compiled by Bloomberg. Indonesia’s rupiah strengthened 0.4 percent to 12,160. Malaysia and Indonesia’s markets were shut on Jan. 31 for the Lunar New Year holiday.
The New Taiwan dollar weakened to NT$30.406 per US dollar on Friday, versus NT$30.376 on Jan. 29, the last trading day before the six-day Lunar New Year break.
On Friday, the greenback fell against the NT dollar on foreign fund inflows as well as eased concerns over currency volatility in emerging markets, dealers said.
A technical rebound in the local stock market and the strength of other regional currencies, such as the South Korean won, also exerted downward pressure on the US dollar, they said.
However, the US dollar’s losses were limited by the central bank’s intervention to rein in the local unit’s rise and keep Taiwanese exports competitive, they added.
China’s yuan, which resumed trading on Friday after a week-long break, fell to 6.0634 per US dollar versus 6.06 on Jan. 30. The 12-month non-deliverable yuan forwards gained 0.1 percent this week to 6.1172 per US dollar in Hong Kong. China’s non-manufacturing purchasing managers index came in at 50.7 last month, compared with a 50.9 reading in December, HSBC Holdings and Markit Economic said on Friday.
South Korea’s won closed at 1,074.45, 0.6 percent stronger than its Jan. 31 close in offshore trading, and weaker than its Jan. 29 onshore close at 1,070.03. South Korean markets were shut on Jan. 30 and 31. Vietnam’s dong weakened 0.2 percent to 21,105, while India’s rupee appreciated 0.6 percent this week to 62.29 per US dollar.
Investors pulled US$10 billion from emerging Asia equity funds and about US$4.9 billion from developing-nation bond funds in the four weeks through Feb. 5, Australia & New Zealand Banking Group reported, citing EPFR Global data.
Meanwhile, the Bloomberg Dollar Spot Index, which monitors the greenback against 10 major counterparts, fell 0.8 percent this week to 1,023.83 in New York, the biggest drop since Oct. 18, as economic reports from manufacturing industries to payrolls showed mixed results, underscoring the economy’s uneven recovery.
The US unit slipped 1.1 percent to US$1.3635 per euro and rose 0.3 percent to ￥102.30. The shared currency added 1.4 percent to ￥139.53.
The pound fell for a second week against the US dollar, as reports showing UK manufacturing and services slowed last month strengthened the case for the Bank of England to keep interest rates at a record low.
The UK currency fell 0.3 percent in the week to US$1.6397 on Friday. It also weakened 1.2 percent to ￡0.8302 per euro, the biggest weekly decline since the period ending Feb. 15 last year.