Asian currencies had the biggest weekly drop since November last year as concern Europe’s debt crisis would worsen spurred demand for US dollars amid signs the US and Chinese economies were losing momentum.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.9 percent this week as global funds pulled about US$1.9 billion from stocks in Taiwan and South Korea. The won and Malaysia’s ringgit saw their biggest losses since September last year, while India’s rupee sank to an all-time low.
The New Taiwan dollar lost 0.7 percent to NT$29.63.
The won fell 2.2 percent from its May 11 close to 1,172.73 per US dollar in Seoul. The ringgit dropped 2 percent to 3.1350 in Kuala Lumpur. The rupee slid 1.5 percent to 54.4250 and Indonesia’s rupiah weakened 1.2 percent to 9,356.
“Investors are taking money out from riskier assets given the lingering concerns about Europe’s debt problem and the economic recovery outlook,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team in Tokyo at Mizuho Corporate Bank. “It’s a double-whammy for Asian currencies as many countries depend on exports for growth.”
The Reserve Bank of India and Bank Indonesia have said they would buy their currencies to counter depreciation, while Bank Negara Malaysia said the country could weather any setbacks arising from Europe’s debt crisis.
“Strong market forces in favor of the dollar have created panic,” said J. Moses Harding, executive vice president at IndusInd Bank Ltd in Mumbai. “The Reserve Bank of India does not have enough ammunition to fight against the tsunami-like ferocious headwinds the rupee is facing.”
The yuan weakened 0.28 percent this week to 6.3284 per US dollar in Shanghai and touched 6.3307, the weakest level since March 15, according to China Foreign Exchange Trade System. The People’s Bank of China lowered its reference rate 0.41 percent to 6.3209, the biggest weekly decline since August 2010.
The central bank in Asia’s biggest economy cut lenders’ reserve requirements effective on Friday for the third time in six months to support the economy, which expanded in the first quarter at the slowest pace since mid-2009. Goldman Sachs Group Inc lowered its forecast for second-quarter growth to 7.9 percent from 8.5 percent, according to a research note published on Friday. The bank reduced its projection for this year to 8.1 percent from 8.6 percent.
Thailand’s baht dropped 0.5 percent this week to 31.33 per US dollar in Bangkok. A government report tomorrow may show the economy shrank 0.9 percent in the first quarter, according to the median estimate in a Bloomberg News survey of economists. GDP slumped 9 percent in the final three months of last year as the worst floods in almost 70 years damaged factories and crops.
The Philippine peso depreciated 1.6 percent to 43.247 against the greenback, while Vietnam’s dong dropped 0.1 percent to 20,848.
SLUMPING EURO
The euro fell for a third week against the US dollar, reaching a four-month low, after the failure of Greek leaders to form a government increased concern the debt crisis may spread to other nations in the eurozone.
The euro currency dropped for a fourth week against the yen as investors await a June 17 election in Greece and amid a G8 summit meeting that began on Friday. Higher-yielding currencies, including Brazil’s real, slumped as increased concern about the euro crisis damped demand for risk. The yen rose to a three-month high against the greenback.
“Given the recent past for Greece, investors are going to remain skeptical ahead of that mid-June election,” said Joe Manimbo, a market analyst in Washington at Western Union Co’s Western Union Business Solutions unit. “We could see continued political discord in Greece, something that would only increase worries about the debt crisis and likely keep borrowing costs for nations like Spain and Italy elevated.”
The euro lost 1.1 percent to US$1.2780, falling to US$1.2642, the weakest since Jan. 16. It has dropped 3.5 percent so far this month. The shared currency weakened 2.2 percent to ￥100.98, the most since the period ended on April 6. The Japanese currency appreciated ￥1.2 to ￥79.02 per US dollar and touched ￥79.00, the strongest since Feb. 17.
The pound fell against the euro, after earlier touching ￡0.7951, the strongest since November 2008, as the Bank of England (BOE) said UK growth would stay “subdued” in the near term. BOE Governor Mervyn King said the UK faced threats from the eurozone’s “storm” as he released the quarterly Inflation Report in London.
Sterling fell 0.5 percent to ￡0.8078 per euro and lost 1.6 percent to US$1.5817.
The Canadian dollar fell 2.1 percent to C$1.0222 against the greenback and the Mexican peso lost 1.8 percent to 13.8158 per US dollar.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
Prices of gasoline and diesel products at domestic gas stations are to fall NT$0.2 and NT$0.1 per liter respectively this week, even though international crude oil prices rose last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices continued rising last week, as the US Energy Information Administration reported a larger-than-expected drop in US commercial crude oil inventories, CPC said in a statement. Based on the company’s floating oil price formula, the cost of crude oil rose 2.38 percent last week from a week earlier, it said. News that US President Donald Trump plans a “secondary
RSS