Most emerging Asian currencies fell yesterday as disappointing China data sparked concerns of a sharp slowdown in the world's second-largest economy when the U.S. Federal Reserve is expected to raise interest rates earlier than forecast. The Philippine peso hit a 5-week low. The peso lost as much as 0.5% to 44.13/USD, the THB’s weakest since 08/08, amid dollar demand from local importers.
The THB had its biggest weekly drop in more than a month as the prospect of higher U.S. interest rates damped demand for Thai bonds. The currency fell 0.7% last week to 32.208 per dollar, the largest loss since the period ended 01/08. It was little changed today and touched a five-week low of 32.258 earlier. Foreign funds pulled a net $410 million from local-currency notes in the first four days of last week, set for the biggest outflow since early August.
Japan's yen fell to a six-year low against the U.S. dollar last week Thursday after Bank of Japan Governor, Haruhiko Kuroda, assured Prime Minister Shinzo Abe that the central bank wouldn't shrink from further easing monetary policy to hit the country's inflation target of 2%. The JPY's weakness follows the dollar's recent gains on expectations that the Federal Reserve will end its bond-buying program in October, and could be preparing to raise rates as early as the first half of 2015.
The MYR fell by the most in a year and led losses in Asia on concerns that a strengthening U.S. economy will prompt the Federal Reserve to bring forward its timeline for raising borrowing costs. Yesterday, the ringgit retreated 1% to 3.2290 per dollar. Economists believe that the ringgit has depreciated due to the broader weakness seen in regional currencies.
Ahead of the Federal Reserve’s Federal Open Market Committee (FOMC) meeting, the Indonesian rupiah exchange rate depreciated 1.26% to IDR 11,971 per US dollar yesterday (15/09). Indonesia’s currency depreciated sharply ahead of the FOMC’s two-day meeting as investors are waiting for the results on Thursday. The IDR has also been put under additional pressure due to renewed concerns about economic growth as a result of new economic sanctions imposed by the European Union and USA on Russia. Bank Indonesia's benchmark rupiah rate depreciated 0.37% to IDR 11,875 per US dollar on Monday (15/09).
The won fell to a five-week low as weaker-than-estimated Chinese data raised concern about growth in South Korea’s biggest export market. The won declined 0.3% to 1,037.98 per dollar at the close in Seoul yesterday. The currency fell to 1,041.21 earlier, the weakest level since 08/08, and dropped 1.1% last week. As most other Asian economies, the WON came under additional pressure as growing anticipation of an early rate hike by the U.S Federal Reserve prompted investors to chase long-positions in the dollar.
UPCOMING ECONOMIC DATA AND EVENTS
16 September 2014 03h00 am UTC Chinese FDI (YTD) YoY Data
17 September 2014 06h00 am UTC Singapore Balance of Trade Data
17 September 2014 08h30 am UTC Thai Interest Rate Decision
17 September 2014 10h00 am UTC Malaysian Inflation Rate (YoY)
18 September 2014 00h50 pm UTC Japanese Balance of Trade Data
18 September 2014 09h30 am UTC Hong Kong Unemployment Rate Announcement
18 September 2014 11h00 am UTC Malaysian Interest Rate Announcement
19 September 2014 06h00 am UTC Japanese Leading Economic Index-Final