The won led losses in Asian currencies this week after the Bank of Korea signaled its concern that economic growth is slowing amid speculation Japan will add to measures that weaken the yen.
South Korea’s currency had its biggest weekly decline in six after the central bank left interest rates unchanged yesterday and officials said the value of yen, which has lost 10 percent against the dollar this year, poses a threat to the economy. Haruhiko Kuroda was confirmed today as Bank of Japan governor, with Kikuo Iwata and Hiroshi Nakaso as his deputies, ushering in a new central bank leadership team that may push for additional monetary stimulus.
“It is a won story,” said Nick Verdi, a strategist at Barclays Plc in Singapore. “A number of factors are impacting the won. The first is the hit to Korean sentiment on the back of ongoing yen weakness, and the second factor is the possibility of a rate cut spooking the markets.”
The won fell 1.8 percent this week to 1,110.95 per dollar in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit declined 0.6 percent to 3.1235 and Indonesia’s rupiah dropped 0.2 percent to 9,706. The Bloomberg JPMorgan-Asian Dollar Index lost 0.1 percent in the past five days, the most since the period through Feb. 8.
South Korea’s officials flagged the risk that growth will fail to recover to closer to its potential rate, estimated at 3.8 percent by central bank Governor Kim Choong Soo, after a 2 percent expansion last year. The BOJ may ease as soon as the next scheduled policy meeting on April 3-4, assuming Kuroda can persuade existing members of the board to go along with his plans, according to JPMorgan Chase & Co.
The ringgit had a second weekly drop on concern the government will lose support in coming elections. Prime Minister Najib Razak, who must dissolve parliament by April 28, saw his approval rating drop to 61 percent in February, the lowest since August 2011, according to a survey from the Merdeka Center for Opinion Research released Feb. 26. Najib has embarked on a $444 billion, 10-year economic development plan.
“There was speculation early in the week that parliament was dissolved,” said Andy Ji, a foreign-exchange strategist in Singapore at Commonwealth Bank of Australia. “The outcome of the polls is also a big question mark.”
The rupiah declined for a second week after foreign funds sold $57 million more Indonesian shares than they bought in the four days through yesterday, exchange data show. The last weekly outflow was in December. The Jakarta Composite Index has fallen 1.7 percent since reaching an all-time high on March 8.
Elsewhere in Asia, China’s yuan was steady this week at 6.2135 against the greenback, according to data compiled by Bloomberg. Taiwan’s dollar fell 0.1 percent to NT$29.762, while the Philippine peso rose 0.2 percent to 40.607. India’s rupee climbed 0.3 percent to 54.135 and Thailand’s baht rose 0.5 percent to 29.55.