Indonesia’s rupiah led a second weekly decline in Asian currencies this week spurred by concern that slowing economic growth in China will dampen demand for the rest of the region’s exports.
A gauge of Chinese manufacturing released this week showed that its factory output probably contracted for the fourth consecutive time this month, while the IMF predicted that the nation’s expansion will slow to 7.5 percent this year from 7.7 percent last year.
“We’ve had some negative China headlines coming out,” Mizuho Bank Ltd senior economist Vishnu Varathan said in Singapore. “Asian currencies are struggling to hold on to the gains for the year.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies except the yen, dropped 0.4 percent from April 18 to 115.07 this week.
In Taipei, the New Taiwan dollar fell 0.3 percent to NT$30.32 this week, compared with NT$30.230 on April 18, while the yuan lost 0.5 percent for its biggest decline in a month after hitting a 16-month low of 6.2583 per US dollar on Friday.
A preliminary reading for the purchasing managers’ index for Chinese manufacturing was at 48.3 this month, up from 48 last month, HSBC Holdings PLC and Markit Economics reported this week.
Growth is to ease further, Credit Suisse Group AG chief regional economist Dong Tao (陶冬) said in Hong Kong on Thursday, adding that he is pessimistic on China’s short and medium-term outlooks.
Fueling regional uncertainty are the upcoming national elections in Indonesia, Thailand and India.
In Jakarta, the rupiah slid 1.3 percent to 11,565 per US dollar in its biggest five-day decline since December last year, after early results from a parliamentary vote this month showed no clear majority, increasing uncertainty on the outcome of July’s presidential race.
“The rupiah is on track to weaken,” said Saktiandi Supaat, head of foreign exchange research at Malayan Banking Bhd in Singapore.
“The market wants to see who Jokowi will partner with and their stance on the economy,” Suppaat said, referring to presidential frontrunner Joko Widodo — popularly known as Jokowi — of the Indonesian Democratic Party of Struggle, which last month said it would be open to a coalition.
On Wednesday, concern that the potential for Indonesia’s current account deficit to widen will deter overseas investors sent the rupiah to a seven-week low of 11,658 per US dollar.
The shortfall probably exceeded 2 percent of GDP in the first quarter, compared with 1.98 percent in the previous three months, Bank Indonesia Governor Agus Martowardojo said on Bloomberg TV Indonesia last week.
In India, the rupee lost 0.6 percent to 60.6250 due to concern that the national elections will fail to deliver a clear winner when votes are counted May 16.
Most polls show the Hindu nationalist Bharatiya Janata Party winning the most seats, while falling short of a majority, an outcome that will probably end the 10-year rule of Indian Prime Minister Manmohan Singh’s National Congress of India party.
Elsewhere in Asia this week, the Malaysian ringgit fell 0.9 percent to 3.2698 per US dollar, the Thai baht lost 0.3 percent to 32.262, the Philippine peso dropped 0.5 percent to 44.645, the won slipped 0.4 percent to 1,041.38 and the dong held steady at 21,100.
The yen posted the biggest weekly gain among the dollar’s 31 major peers as escalating tension in Ukraine spurred investor demand for the safest assets.
The yen rose 0.3 percent this week ito ￥102.16 per US dollar and appreciated 0.1 percent to ￥141.30 per euro, which added 0.2 percent to US$1.3834 this week.
The dollar fell 0.7 percent ahead of the US Federal Reserve’s meeting next week, when it is forecast to continue tapering its bond-buying program.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 of its major counterparts, closed the week at 1,011.02 after rising to 1,012.74 on Friday, the highest level since April 8.
In London, the pound was little changed against the greenback and the euro this week, as Bank of England Governor Mark Carney said there is scope to wait for the absorption of spare capacity in the economy before raising key rates from a record low.
Sterling ended the week at US$1.6806 versus the greenback and at ￡0.8235 against the euro, after appreciating to ￡0.8198 on Tuesday, the strongest since Feb. 28.
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