Better than expected trade data (for May) out of Hong Kong bolstered the HKD and provided some much needed positive economic data from the island nation, as Hong Kong’s foreign currency reserves have been under significant pressure in the first four months of 2014.
The Singapore dollar eased 0.2% to 1.2529 per the US dollar, its weakest since June 6. Singapore's non-oil domestic exports unexpectedly fell in May on weak shipments of electronics and pharmaceuticals to its key markets, indicating the city-state may not be benefiting yet from a recovery in developed economies.
The Indonesian rupiah had the strongest depreciation of the week among Asian currencies at 0.82% against the US dollar, spiking above 12,000, with a sell down in equity markets and leading into the first round of presidential elections in early July.
The THB rose 1.2% in June to 32.449 per dollar in late trading yesterday, the third-best performance among 24 emerging-market currencies. An increase in government spending and a rebound in private consumption are providing the impetus this rapid appreciation.
The ringgit gained 0.05% against the US dollar in range trade, supported by downtick 1-month NDF rate, steady Chinese CNY fixing, and slight equity inflows despite some upward pressure on cross SGD/RM.
The South Korean WON gained 0.13% against the USD benefiting from rising equity inflows as part of quarterly portfolio rebalancing.
The Japanese yen saw little change last week against the Dollar. The Bank of japan left the monetary policy unchanged but lowered its outlook on inflation and increased its forecast for growth. Japan’s exports have raised due to the weak Yen, Japan’s trade deficit has shrank to its lowest level in 18 months in December. The USD/JPY pair gaining after making its weekly low of 116.92 on Monday in the absence of any significant data out of either country. The pair then made its weekly high of 118.86 on Tuesday after the IMF lowered its growth forecast for Japan from +0.8% to +0.6% for 2015.
The Singapore Dollar is forecasted to decline another 5 percent by the end of the year. Last week the European Central bank announced plans to buy 60 billion EUR worth of assets each month for a period of 19 months starting in March 2015. Economists expect this move to put pressure on the euro against the Singapore Dollar. The Singapore dollar has strengthened slightly against the US dollar compared to Friday were it was at 1.3448 and today it went to 1.3422.
The Hong Kong Dollar last week was at 7.7526 against the US dollar and today it is sitting at 7.7523 which is roughly at the same point as last week. There has been some talking that investor think the Hong Kong dollar could follow the Swiss and drop its peg to the US dollar but this peg is solid and not going away.
The Thai baht has strengthened slightly over the past week, where it was sitting at 32.9700 and then today we are currently at 32.5730.US dollar. Thai Bhat stays heavy on foreign bond buying and the expectation is that the Bank of Thailand will cut rates on Wednesday.
South Korea’s won closed nearly unchanged against the US dollar after a range bound trading session, with investors reluctant to take clear positions ahead of the US Federal Reserve’s two-day policy meeting due to start later in the day. The Won has strengthened over last week and is at 1076.87 today against the dollar.
INDIA (INR) FOREX MARKET REPORT
The rupee knocked off this morning to 61.51 against the US dollar upon Importers US dollar demand. However, the strong local equity market appeared to marginalise the losses.
Modi (prime minister) and Obama have had some breakthroughs at the talk summits on a civil nuclear agreement in order to clear the build-up of stalled projects. Their agreement to spur nuclear energy projects and the assurance to better co-operate in defence and economic ties positively affected India’s local equity markets. Further local news is on Modi’s commitment towards renewable power to reduce greenhouse gas pollution. India is the 3rd biggest polluting nation (the US and China ahead of India). Modi may work on the Dec Paris deal with Obama that would require all nations to restrain emissions.
While the rupee depreciated against the US dollar the currency gained on the euro as it hit its 11 year low against the greenback. In early trade this morning the rupee dropped down by 9 paise against the US dollar at 61.51.