South Korea’s won and Malaysia’s ringgit led Asian currencies’ decline this week, as signs that Chinese growth is slowing and the crisis in Ukraine deterred risk-taking.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.3 percent from March 7 as data showed that exports from the region’s largest economy slumped and growth in factory output eased.
Making investors extra cautious this week is today’s vote to decide whether the Ukraine’s Crimean Peninsula will join Russia, as well US Federal Reserve policymakers meeting on Tuesday and Wednesday to decide whether to proceed with another US$10 billion cut to its monthly debt purchases.
“There’s risk aversion with the upcoming Ukraine referendum and weakness in China’s industrial production numbers,” said Saktiandi Supaat, a head of foreign exchange research at Malayan Banking Bhd.
That concern about slowing growth in China saw the New Taiwan dollar post its biggest weekly decline since January this week, with investors fearing that a slowdown in Taiwan’s largest export market will hurt the economy.
“Taiwan has quite a big export surplus with China, so if mainland demand weakens, it will have a bigger impact on Taiwan,” Credit Agricole CIB Hong Kong-based strategist Frances Cheung said.
UBS AG and Nomura Holdings Inc were among banks that cut their forecasts for Chinese expansion this year after data on Thursday showed gains in factory output and retail sales trailed estimates.
Central bank Governor Perng Fai-nan (彭淮南) said that China’s shift to a more consumption-driven economy harms Taiwan’s growth more than US stimulus cuts.
The NT dollar fell 0.3 percent this week to NT$30.381, compared with NT$30.302 on March 7, prices from Taipei Forex Inc show. That is the biggest five-day drop since the period ended on Jan. 24.
The currency fell 0.2 percent in the last 10 minutes of Friday trading amid suspected central bank intervention. The monetary authority has sold the NT dollar in the run-up to the close on most days since March 2012, according to traders.
In Seoul, data compiled by Bloomberg showed that the won also posted its biggest weekly drop since the period ended on Jan. 24, falling 1.1 percent to 1,072.78 per US dollar this week, as the ringgit weakened 0.7 percent to 3.2801 to complete its first five-day loss since January and the Philippine peso declined 0.6 percent to 44.655.
In Bangkok, the baht fell 0.1 percent to 32.275 per US dollar this week, as the yuan shed 0.36 percent to 6.1502.
Global funds pulled US$1.5 billion from South Korean and Indian stocks this week, while pumping US$376 million into Taiwanese, Thai and Philippine equities, exchange data show. The funds bought NT$6.5 billion (US$213 million) more Taiwanese equities than they sold this week, the data show.
Standard Chartered PLC is more bullish on the prospects for emerging market currencies in the second half of the year, with the Indonesian rupiah and India’s rupee likely to lead total returns, analysts led by Singapore-based Callum Henderson wrote in a note on Friday.
Elsewhere in Asia, Indonesia’s rupiah climbed 0.8 percent to 11,355, the Indian rupee fell 0.2 percent to 61.1900 and Vietnam’s dong was steady at 21,100.
Bucking the downward regional trend was the yen, which gained the most versus the US dollar since January as demand for haven assets surged due to the Ukraine and the signs of Chinese instability.
The euro rose 0.3 percent to US$1.3914 and touched US$1.3967, the highest since October 2011. The sixth week of gains is the currency’s longest stretch since 2007.
The yen gained 1.9 percent — the most since the five days ended on Jan. 24 — to ￥101.36 against the greenback this week, while adding 1.6 percent to ￥141.03 per euro.
In London, the pound posted straight weekly losses against the greenback and the euro, after Bank of England Governor Mark Carney said the bank will not sell all of the ￡375 billion (US$622 billion) of gilts bought in its asset-purchase plan.
Sterling fell 0.5 percent this week to US$1.6622 and declined 0.8 percent to ￡0.8370 per euro.