Asian currencies fell for a fourth month, led by India’s rupee and Indonesia’s rupiah, as investors pulled money from regional assets on slowing economic growth and an expected reduction in stimulus by the US Federal Reserve.
The Bloomberg-JPMorgan Asia Dollar Index lost 1.1 percent last month, the biggest drop since May. The rupee completed its worst month since 1992 and the rupiah headed for its biggest decline in five years as analysts cut expansion forecasts for the two economies.
Foreign funds pulled US$4.5 billion from Taiwanese, Thai, Indian and Indonesian stocks last month, exchange data show, as 65 percent of economists surveyed by Bloomberg forecast the Fed would start to taper next month.
Despite the withdrawals, the New Taiwan dollar still advanced 0.5 percent to NT$29.983 against the US dollar last month.
China’s yuan also rose 0.15 percent last month to 6.1195 per US dollar, while South Korea’s won gained 1.2 percent to 1,110.04 and Vietnam’s dong strengthened 0.1 percent to 21,150.
On the other hand, the rupee weakened 8.1 percent last month to 65.7050 per US dollar in Mumbai, according to data compiled by Bloomberg. The rupiah dropped 5.9 percent to 10,920, the Philippine peso declined 2.6 percent to 44.605 and Thailand’s baht lost 2.7 percent to 32.15.
Standard Chartered PLC cut its 2013-2014 growth forecast for India to 4.7 percent from 5.5 percent on Thursday, while UBS AG this week reduced its estimate for Indonesia’s growth this year to 5.6 percent from 6 percent.
Thailand entered a recession for the first time since 2009, contracting 0.3 percent in the second quarter from the previous three months, when it decreased 1.7 percent, official data show.
Malaysia’s ringgit had its fourth monthly drop as the nation’s deteriorating current-account position spurred concern among investors. The surplus in the broadest measure of trade shrank 70 percent to 2.6 billion ringgit (US$792 million) in the second quarter, data showed last week. The ringgit weakened 1.2 percent last month to 3.2847 per US dollar.
“The Fed’s taper has shifted the market’s focus to emerging-market asset values and imbalances such as the deterioration in current accounts,” said Nizam Idris, the head of fixed income and currency strategy at Macquarie Bank Ltd in Singapore. “The market is re-pricing Malaysia’s assets.”
DOLLAR, YEN
The US dollar gained versus the majority of its 16 most-traded peers this month on the Fed’s expected tapering.
The greenback rebounded against the 17-nation euro after falling the previous two months as the prospect of US military action against Syria deterred risk-taking.
The Fed “has generally kept the tapering calendar in place, which has maintained the shift out of higher-yielding markets back into Group of 10,” Brian Daingerfield, a Stamford, Connecticut-based currency strategist at Royal Bank of Scotland Group PLC’s RBS Securities unit, said in a telephone interview on Friday. “People also might be buying dollars in anticipation of a potential risk-off move related to a military strike in Syria.”
The Bloomberg US Dollar Index, which tracks the greenback against 10 other major currencies, increased 0.8 percent to 1,034.28 last month in New York, the biggest gain since May.
The US tender gained 0.6 percent to US$1.3222 per euro, touching US$1.3174, its strongest level in more than a month, and climbed 0.3 percent to ￥98.17. The Japanese currency appreciated 0.3 percent to ￥129.80 per euro.
The British pound was the biggest winner last month among the greenback’s major counterparts, with a 2.6 percent gain. Mexico’s peso was the biggest loser, sliding 4.3 percent, while the Brazilian real dropped 4 percent.
The British pound also had its biggest monthly gain versus the euro since January as Bank of England Governor Mark Carney said forward guidance would help the economic recovery in his first policy speech since taking over on July 1. He also said the bank is focused on sustaining the economic recovery despite the “inevitable shocks ahead.”
The pound rose 2.6 percent to ￡0.8529 per euro last month.
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