Asia Currencies Slide in Week as Fed Stance Boosts Dollar Demand

By David Yong - Mar 17, 2012 2:49 AM GMT+0530

LinkedIn
Google +1
Print
QUEUE
Q

Asian currencies had a second weekly decline as an improving U.S. economy and the Federal Reserve’s decision not to embark on further monetary easing boosted demand for the dollar.

Malaysia’s ringgit led losses after the government reported factory production rose the least in six months in January following data last week showing the smallest increase in exports since 2010. The rupee posted its worst weekly losing streak for the year after policy makers left interest rates unchanged, citing inflation risks caused by higher oil prices.

“This week’s main trend was the dollar’s appreciation supported by signs of U.S. economic improvement,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. “Based on the series of data recently, the market also views the Fed may not keep low interest rates until 2014 as previously predicted.”

The ringgit fell 1.7 percent from a week ago to 3.0613 per dollar in Kuala Lumpur yesterday, after reaching a seven-week low on March 15, according to data compiled by Bloomberg. The Philippine peso declined 1.1 percent to 43.068, the rupee dropped 0.7 percent to 50.1912, and South Korea’s won lost 0.7 percent to 1,125.78.

Other reports from Asia this week signaled economic growth in the region is starting to slow. Thailand’s exports contracted for a third month in January, while China reported its worst trade deficit since at least 1989 for February. The Bloomberg- JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most- active currencies excluding the yen, fell 0.5 percent.
U.S. Data Stimulus

In contrast, U.S. data issued this week showed Americans applied for fewer jobless benefits, growth in retail sales accelerated and manufacturing gained momentum. The Dollar Index (DXY) traded on ICE Futures in New York, which tracks the currency against those of six major trading partners, rose for a third week and reached its highest level in almost two months.

China’s yuan fell for a third week after the government reported the smallest increase in consumer prices in 20 months on March 9. The central bank weakened its daily reference rate by 0.25 percent yesterday, the most in a week, to 6.3200 per dollar. The currency dropped 0.2 percent from March 9 to 6.3227 in Shanghai, according to the China Foreign Exchange Trade System.

“China’s policy makers are definitely increasing volatility,” said Craig Chan, the Singapore-based head of foreign exchange for Asia outside of Japan at Nomura Holdings Inc. “They want to eventually move to a more market-driven currency.”
Oil Pressure

The won traded near a one-month low after the Bank of Korea said on March 14 that the unemployment rate unexpectedly jumped to 3.7 percent in February, the highest in almost a year.

Indonesia’s rupiah dropped 0.4 percent to 9,156 per dollar and hit a two-month low of 9,218 on March 15. The currency completed a second weekly decline after overseas investors cut holdings of sovereign debt on concern government plans to raise energy prices will stoke inflation.

Global funds have trimmed bond ownership by 6.1 trillion rupiah ($665 million) since Feb. 22, when President Susilo Bambang Yudhoyono said fuel subsidies must be reduced.

“The biggest factor driving the rupiah is still the plan to raise fuel prices, which caused inflation expectations in Indonesia to rise significantly,” said Mika Martumpal, an analyst at PT Bank CIMB Niaga in Jakarta.

Elsewhere this week, Thailand’s baht fell 0.5 percent to 30.75 per dollar, while Taiwan’s dollar slipped 0.2 percent to NT$29.562 and Vietnam’s dong rose 0.1 percent to 20,820.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

LinkedIn
Google +1
Print
QUEUE
Q

Related News:

Asia ·
China ·
India & Pakistan ·
Currencies

Sponsored links
Videos you may like:
Investors Should Be `Getting Out' of Stocks
Euro to Fall to $1.15 in 2012 on ECB Lending, Feb. 16
Euro May Fall Toward Parity With Dollar
by Taboola
Sponsored Links
Give a Gift of Bloomberg Markets Magazine and Get Great Savings!
More Stories

Britain Will Keep Austerity With Unemployment at 16-Year
Q
Goldman Sachs Board Must Act on Smith Op-Ed, Ex-Partner Writes
Q
China Home Prices Fall in More Than Half Cities Tracked
Q
Afghan Suspect’s Life Marked by Honors, Personal Setbacks
Q

[Rate These Stories] Rate These Stories More News »
Advertisement
Most Popular Stories

Goldman Sachs Board Must Act on Smith Op-Ed, Ex-Partner Writes
Q

S&P 500 Gets 9% Cheaper
Q

U.S. Citizen Freed After Nine-Month Iraq Detention, UN Sa
Q

U.S. Stocks Advance as Fed Boosts Economic Outlook
Q

George Clooney Arrested at Sudan Protest in Washington
Q


More Most Popular Stories »
Sponsored Links
Advertisement
JOB SEARCH
Post a Job »
Senior Financial Analyst -...
Toyota Financial Services - Torrance, CA
Senior Financial Analyst
7138 Financial Planning - Pittsburgh, PA
Senior Financial Analyst —...
Toyota - Los Angeles, CA
Sr. Financial Analyst -...
Sears - Hoffman Estates, IL
Search all jobs
jobs by job search
Advertisements
Click here to find out more!
Bloomberg

Bloomberg on
Facebook
Follow Bloomberg
on Twitter
Follow Bloomberg
on LinkedIn

More from Bloomberg

Bloomberg Businessweek
Business Exchange
Bloomberg Briefs
Bloomberg Government
Bloomberg HT
Bloomberg Institute
ブルームバーグ(日本語)
Bloomberg Law
Bloomberg BNA

Bloomberg Link
Bloomberg Markets Magazine
BMART
Bloomberg New Energy Finance
Bloomberg Open
Bloomberg Press
Bloomberg Sports
Jobs by Indeed
Bloomberg Blog Bloomberg Blog RSS

Company

About Bloomberg
Careers
Press Room
Advertising
Contact Us
关于彭博中国
会社概要(日本語)

Help
Sitemap
Trademarks
Feedback
Terms of Service
Privacy Policy

[Rate this Page] Rate this Page
©2012 BLOOMBERG L.P. ALL RIGHTS RESERVED. Made in NYC
Q
What is the queue?
More »Items In Your queue
This is your Bloomberg Queue

The queue will help you find news, save stories for later and take them with you
Learn MoreClose
More » New Suggestions