Asian currencies fell this week, led by South Korea’s won, as North Korea’s nuclear arms test and threat of military strikes prompted investors to seek refuge in the US dollar.
The Philippine peso and Malaysia’s ringgit weakened after the two nations reported worse-than-expected economic data for the first quarter.
South Korean Vice Finance Minister Hur Kyung-wook said on Friday the government was “closely monitoring” financial markets after North Korea conducted a nuclear weapons test on Monday and launched a series of short-range missiles.
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The won fell 0.6 percent this week to 1,255.25 per US dollar in Seoul, according to data compiled by Bloomberg. The peso declined 0.7 percent to 47.34 and the ringgit dropped 0.7 percent to 3.4950.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slipped 0.3 percent this week. It reached a seven-month high last Friday.
The yen tumbled 1.6 percent to ¥96.34 per US dollar as rising yields on US Treasuries and signs a global recession is easing prompted Japanese investors to send more funds abroad in search of better returns.
The New Taiwan dollar pared gains from the strongest level since December on speculation the central bank intervened to weaken the currency and aid exporters.
Taiwan’s central bank probably sold the currency in the last 15 minutes on Wednesday, the last day of trading for the week, said Henry Lin, a foreign-exchange trader at Shin Kong Commercial Bank (新光商銀) in Taipei.
The NT dollar rose earlier as US and Japanese data added to evidence a global recession is abating, bolstering demand for emerging-market assets.
Taiwan’s currency closed little changed at NT$32.650 per US dollar on Wednesday, according to Taipei Forex Inc. It reached NT$32.504, the strongest since Dec. 19.
Indonesia’s rupiah fell 0.5 percent this week to 10,285 per dollar on speculation importers increased dollar purchases to settle bills and debt payments.
Elsewhere, the Singapore dollar dropped 0.4 percent to S$1.4472. China’s yuan declined 0.07 percent to 6.8281, the biggest slide in two months, before the nation’s financial markets closed for a public holiday on Thursday and Friday.
India’s rupee rose 0.8 percent, trimming losses this week to 0.3 percent, after the economy expanded more than expected in the first quarter. The currency gained 6 percent this month, Asia’s best performer excluding the yen.
The US dollar declined beyond US$1.41 against the euro for the first time this year as evidence the global recession is easing sent investors in search of assets with higher returns.
The US currency also posted its biggest monthly drop versus the euro this year and fell yesterday against major counterparts including the Australian and New Zealand dollars as South Korea said its state pension fund plans to hold fewer Treasuries.
The US securities were poised for a second month of declines on concern debt sales will overwhelm demand.
The dollar weakened 1.4 percent to US$1.4136 per euro at 4:17pm in New York, from US$1.3941 on Friday, extending its decline this month to 6.4 percent, the biggest since December, when it dropped 9.2 percent. The dollar depreciated 1.7 percent to ¥95.24 from ¥96.85. The yen advanced 0.3 percent to ¥134.67 per euro from ¥135.04 yesterday.
Sterling increased as much 1.6 percent to US$1.6198, the highest level since Nov. 5, and posted a 9.3 percent monthly gain, the biggest since 1985.
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