Peso Leads Drop With Ringgit in Fed-Induced Asia Currency Losses

The Philippine peso and Malaysian ringgit dropped the most among Asian currencies this week after indications from the Federal Reserve that it’s closer to raising interest rates bolstered demand for the dollar.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, posted the biggest five-day gain since November as the Fed’s July minutes showed “many” Federal Open Market Committee members had said they might have to boost borrowing costs earlier than anticipated. Asian bonds fell this week on prospects higher U.S. rates will drive up Treasury yields and reduce the allure of emerging-market assets.

“The broader theme is generally the stronger dollar backdrop and that’s tied to the good economic data that’s heating up the debate about the slack in the U.S. economy,” said Sim Moh Siong, a strategist at Bank of Singapore “That debate itself was reflected in the FOMC minutes that seems to suggest a more hawkish tilt.”

The peso dropped 0.4 percent for the week to 43.835 per dollar in Manila, according to data from Tullett Prebon Plc. Malaysia’s currency declined 0.2 percent to 3.1610, data compiled by Bloomberg show. The index tracking the greenback climbed 0.7 percent from Aug. 15 to 1,026.79 and reached a six-month high of 1,029.64 on Aug. 21.

China Growth

Elsewhere in Asia, China’s yuan dropped after disappointing factory output data, while the South Korean won, Taiwan dollar and India’s rupee advanced.

The yuan posted its biggest weekly loss since June after a preliminary reading of manufacturing in a Purchasing Managers’ Index compiled by HSBC Holdings Plc and Markit Economics came in at 50.3 for August. That was below the 51.7 in July and the 51.5 median estimate in a Bloomberg survey. It also edged closer to the 50 dividing line separating expansion from contraction.

The nation’s currency dropped 0.1 percent from Aug. 15 to 6.1529 per dollar and reached 6.1616 yesterday, the weakest level since Aug. 13, China Foreign Exchange Trade System prices show.

“Investors now wonder whether China’s growth momentum is sustainable,” said Banny Lam, Hong Kong-based co-head of research at Agricultural Bank of China International Securities Ltd. “The weak data also give an excuse for profit-taking in the yuan.”

In Indonesia, the Constitutional Court rejected a challenge to the results of the July 9 election, clearing the final hurdle for Joko Widodo to become president in October.

The court dismissed Prabowo Subianto’s case, saying there was no evidence to support his team’s claims of structured, massive and systematic fraud. Prabowo “respects” the decision, which can’t be appealed, his spokesman Tantowi Yahya told reporters after the announcement.

Indonesia Election

Indonesia’s currency climbed to a three-week high of 11,643 yesterday before erasing those gains to end the week little changed at 11,679 per dollar in Jakarta.

“The court’s affirmation of Jokowi’s victory pushed one big uncertainty out of the way,” said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. in Singapore.

India’s rupee climbed 0.5 percent for the week to 60.4835 against the greenback in Mumbai, Taiwan’s dollar strengthened 0.1 percent to NT$30.020 and the South Korea won gained 0.3 percent to 1,017.75. Thailand’s baht dropped 0.1 percent to 31.924 and Vietnam’s dong was steady at 21,195.

To contact the reporter on this story: Justina Lee in Taipei at jlee1489@bloomberg.net

To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net; Simon Harvey at sharvey6@bloomberg.net; Robin Ganguly at rganguly1@bloomberg.net Jim McDonald

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.