Asian Currencies Complete Weekly Drop as U.S. Data Boost Dollar

Aug. 1 (Bloomberg) -- Michael Spence, professor at NYU Stern School of Business, and Josh Rosner, managing director at Graham Fisher and Company, discuss yesterday’s market selloff and the global risks that brought us to this point. They speak on “Bloomberg Surveillance.”

Asian currencies completed their biggest weekly decline in three months as data signaling a strengthening U.S. recovery boosted demand for the dollar.

Second-quarter growth in the world’s largest economy topped the median estimate in a Bloomberg survey and a jobless claims average fell to an eight-year low, reports showed this week. The Bloomberg Dollar Spot Index gained 0.9 percent in the past five trading days, the most since November, as the U.S. and Europe stepped up pressure on Russia over Ukraine and as Standard & Poor’s declared Argentina in default on a debt payment.

“Asian currencies are increasingly succumbing to dollar strength,” said Mitul Kotecha, head of foreign-exchange strategy for Asia-Pacific at Barclays Plc in Singapore. “There’s been an element of risk aversion as well.”

The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies excluding the yen, fell 0.4 percent from July 25 in Hong Kong. India’s rupee weakened 1.8 percent for the week, and reached a three-month low of 61.1900 per dollar yesterday.

The baht and the ringgit each fell 1.2 percent to 32.230 per dollar and 3.2133, respectively. Malaysia’s financial markets were shut July 28 and 29 and Indonesia was closed this week for the Eid holiday. One-month rupiah forwards fell 2.3 percent from July 25, the most since November, to 11,910.

U.S. gross domestic product expanded at a 4 percent annualized rate from April through June, exceeding the 3 percent median estimate of economists in a Bloomberg survey and after shrinking 2.1 percent in the first quarter, according to a July 30 report.

Argentina Crisis

Argentinian President Cristina Fernandez de Kirchner denied the country defaulted on its debt in her first public comments since S&P said the nation had done just that for the second time in 13 years. Fernandez said in a televised speech July 31 that while she’s open to further talks with hedge funds that successfully sued her government for $1.5 billion, she must defend the nation’s interests.

The baht completed its biggest five-day decline this year after reaching an eight-month high of 31.740 per dollar on July 23. Thailand recorded a current-account surplus of $1.8 billion in June, the first excess in three months, after imports fell 14.1 percent from a year earlier, data showed July 31.

“The big surplus came from the sharp contraction in imports, which is likely to affect the economy in the long term,” said Komsorn Prakobphol, an investment strategist at Tisco Financial Group Pcl in Bangkok. “It shows domestic demand is very weak.”

The Philippine peso retreated 1.1 percent to 43.685 per dollar, its biggest weekly drop in four months. Bangko Sentral ng Pilipinas raised the rate it pays lenders for overnight deposits to 3.75 percent from a record low of 3.5 percent July 31.

South Korea’s won dropped 1.1 percent in the past five days to 1,037.10 per dollar. Elsewhere in Asia, Taiwan’s dollar depreciated 0.1 percent to NT$30.069, China’s yuan strengthened 0.19 percent to 6.1798 and Vietnam’s dong was steady at 21,230.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Amit Prakash

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