The Indonesian rupiah led losses in Asian currencies this week after the US Federal Reserve signaled its monetary stimulus may be pared in the coming months, dampening inflows to emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.1 percent in the past five days after gaining last week. Overseas investors sold US$878 million more regional stocks than they bought in Taiwan, Thailand, Indonesia and the Philippines in the first four days of the week, exchange data show.
The Fed’s US$85 billion in monthly bond purchases might be reduced as the world’s largest economy improves, according to the minutes of the Federal Open Market Committee’s Oct. 29 and 30 meeting released on Wednesday.
Several Asian emerging economies face a “key source of risk” in the eventual tapering of stimulus in advanced nations, IMF deputy managing director Zhu Min (朱民) said.
Speculation that the Fed’s “tapering will come sooner rather than later is negative for emerging markets,” said Koji Fukaya, CEO and currency strategist at FPG Securities Co in Tokyo.
The rupiah fell 0.6 percent this week to 11,695 per US dollar in Jakarta, after touching 11,736 earlier, the weakest level since March 2009, according to prices from local banks compiled by Bloomberg. Thailand’s baht slid 0.7 percent to 31.810 and Malaysia’s ringgit dropped 0.5 percent to 3.2173.
The New Taiwan dollar slipped 0.1 percent this week to NT$29.645. It was its fifth consecutive week of decline — its longest run of losses in 17 months, as global funds sold local stocks amid signs the Fed was preparing to cut stimulus.
Overseas investors sold US$768 million more Taiwanese stocks than they bought this week, exchange data show.
The Thai baht touched a two-month low of 31.90 per US dollar on Friday amid political turmoil. Thailand’s Constitutional Court ruled against the government’s attempt to establish a fully elected Senate on Wednesday, saying the change would undermine its role as a check-and-balance on the lower house. Supporters and opponents of the government called for separate rallies today, according to a government Web site.
Elsewhere in Asia, the Philippine peso fell 0.5 percent this week to 43.865 per dollar, while the Indian rupee gained 0.4 percent to 62.8650 and South Korea’s won strengthened 0.3 percent to 1,060.40. China’s yuan was little changed at 6.0925 and Vietnam’s dong rose 0.1 percent to 21,090.
YEN DROPS, EURO RISES
The yen fell to a four-year low against the euro and weakened past ￥101 per US dollar as Japan’s central bank kept its pledge to expand the monetary base as part of the government’s strategy to end 15 years of deflation.
The euro gained for a second week as a rise in German business confidence fueled optimism the economic recovery is gaining momentum. Yields on US debt rose to the highest in two months relative to Japan’s as the Fed signaled reduced asset purchases “in coming months.” US consumer confidence is foreca￡st to climb this month after plunging last month amid the government shutdown.
“The yen was among the underperformers in the Group of 10 this week,” Valentin Marinov, head of European G10 currency strategy at Citigroup Inc in London, said in an e-mail. “The [US] dollar could remain supported against the yen from the upcoming US data, as well as more signals from the Fed about the timing of tapering.”
The yen fell 1.5 percent this week to ￥137.28 per euro after touching ￥137.35, the weakest level since October 2009. The Japanese currency slipped 1.1 percent to ￥101.27 per US dollar after reaching ￥101.35, the least since July 8. The shared currency rose 0.5 percent to US$1.3558.
The Bloomberg US Dollar Index, which tracks the currency against 10 major counterparts, rose 0.2 percent to 1,018.56.
The pound strengthened for a third week against the US dollar as a report showed UK factory orders climbed to the highest level in almost two decades, spurring demand for Britain’s currency.
The pound advanced 0.6 percent this week to US$1.6208 as of 5:15pm in London on Friday after gaining 1.2 percent during the previous two weeks. It appreciated 0.2 percent to ￡0.8356 per euro after climbing to ￡0.8317 on Friday, the strongest level since Nov. 7.
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