The won led a third weekly drop in Asian currencies as the yen’s slide to a seven-year low crimped the outlook for South Korean exports.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-traded currencies excluding the yen, declined 0.4 percent this week to 114.24 on Friday, near a 14-month low. The won fell 0.7 percent to 1,100.78 per US dollar, Singapore’s currency slid 0.7 percent to S$1.2982 and Indonesia’s rupiah dropped 0.3 percent to 12,210.
South Korea’s currency has been under pressure from a weakening yen after Japan, which competes with its neighbor selling electronics, cars and ships in international markets, boosted stimulus two weeks ago.
Photo: Reuters
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 peers, rose 0.1 percent this week, as data showed an improvement in the US labor market, adding to speculation the US Federal Reserve is on course to start raising interest rates next year.
POLICIES DIVERGE
“There is a contrast regarding monetary policies in the US versus the eurozone and Japan,” said Frances Cheung, the Hong Kong-based head of Asian rates strategy at Credit Agricole CIB. “A stronger [US] dollar and a weaker yen are apparently not an ideal combination for Asian currencies.”
The European Central Bank, which has cut already cut interest rates to record lows, is focused on boosting its balance sheet to spur growth in the euro area, President Mario Draghi said last week.
South Korea is the only one of eight Asian stock markets tracked by Bloomberg to see outflows this week, with foreign funds pulling US$14 million, exchange data show.
It’s “a concern if the yen weakens more” as carmakers and steel producers are likely to be hurt, Bank of Korea Governor Lee Ju-yeol said on Thursday after holding the benchmark interest rate at 2 percent.
The Japanese currency has fallen 8 percent against the US dollar in the past month.
In Taipei, the New Taiwan dollar slipped 0.2 percent this week to NT$30.766, as the central bank took advantage of the yen’s weakness to push down the local currency, dealers said.
The rupiah fell for a third week after Bank Indonesia kept borrowing costs unchanged on Thursday in its first meeting since Indonesian President Joko Widodo took office. The monetary authority refrained from tightening policy before the government announces a planned rise in subsidized fuel prices that is likely to spur consumer-price gains.
The yuan in Hong Kong had its first weekly advance in three as investors prepare for the start of a link between the territory’s stock exchange and the Shanghai bourse tomorrow. The offshore currency climbed 0.09 percent since Nov. 7 to 6.1303 per US dollar, while the onshore yuan in Shanghai fell 0.13 percent to 6.1307.
Elsewhere in Asia, the Philippine peso appreciated 0.2 percent this week to 44.943 per US dollar, while India’s rupee fell 0.1 percent to 61.67213. Thailand’s baht was little changed at 32.80, Malaysia’s ringgit was steady at 3.3470 and Vietnam’s dong declined 0.1 percent to 21,325.
GREENBACK PREVAILS
The US currency rose for a fourth week against its major counterparts on indications the Fed would boost interest rates next year. The pound slumped to its lowest in 14 months after the Bank of England cut growth forecast.
“What’s driving [the US] dollar-yen continually higher is this political risk of an election [in Japan] called, which we think is likely,” Phyllis Papadavid, a senior global-currency strategist at BNP Paribas SA in London, said by phone.
“There are a lot of headwinds for the yen. The BOJ [Bank of Japan] policy is key here because we’re in a foreign-exchange market that’s trading on policy divergence,” she said.
The yen slid 1.5 percent to ￥116.29 per US dollar this week in New York, and reached ￥116.82, the weakest level since October 2007. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, added 0.1 percent to 1,092.66, reaching is highest level on a closing basis since March 2009.
The 18-nation euro rallied 0.6 percent to US$1.2525 and advanced 2.1 percent to ￥145.67.
The US dollar has gained 7.1 percent during the past three months, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has lost 7 percent, the worst performer, while the euro has declined 0.4 percent.
Hedge funds and other large speculators increased bets on a decline in the Japanese currency against the dollar. The difference in the number of wagers on a drop compared with those on a gain — net shorts — was 82,563 on Nov. 11, up from 71,651 a week earlier, according to data from the Washington-based
Britain’s pound fell a fourth week, the longest streak of declines since the period ending Aug. 22. Sterling declined after policymakers cut growth forecasts for the UK economy. GDP is forecast to expand 2.9 percent next year and 2.6 percent in 2016, according to the Bank of England’s quarterly Inflation Report. That is down from projections for 3.1 percent and 2.8 percent growth made in August.
The currency fell 1.3 percent to US$1.5669, after touching US$1.5593, its lowest level since September last year.
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