Malaysia’s ringgit and the Philippine peso led losses in Asian currencies this week on bets an improving U.S. economy will prompt the Federal Reserve to further cut stimulus that has buoyed emerging markets.
The Bloomberg-JPMorgan Asia Dollar Index halted a three-week gain as U.S. jobless claims dropped to the lowest level since November and retail sales beat economists’ estimates, official data showed this week. Asian currencies are poised to extend declines on concern an increase in Chinese borrowing costs and a weak yen will threaten growth in the region, according to JPMorgan Chase & Co.
“The Fed will continue tapering,” said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia. “This week we had a bunch of data out of the U.S. showing that the improving trend hasn’t really changed.”
The peso weakened 0.7 percent in the past five days to 45.015 per dollar in Manila, according to prices from Tullett Prebon Plc. The ringgit dropped 0.8 percent to 3.2977 as of Jan. 16, according to prices compiled by Bloomberg. Malaysian financial markets were shut yesterday for a holiday. The Asia Dollar Index, which tracks the region’s 10 most-active currencies, fell 0.3 percent this week.
U.S. jobless claims decreased by 2,000 to 326,000 in the week ended Jan. 11, the least since the end of November, according to Labor Department figures. The median forecast of 51 economists surveyed by Bloomberg called for 328,000. The Fed started reducing its monthly bond purchases in January by $10 billion to $75 billion.
“Worries over China’s tight liquidity stance generate downside risks to growth,” JPMorgan analysts including Hong Kong-based Bert Gochet wrote in a report Jan. 16.
China’s money market rates jumped in December to a six-month high, raising concern that tighter lending conditions may slow the world’s second-largest economy. The yen’s 14 percent decline over the past 12 months is fueling speculation that a weaker currency may help Japanese companies grab overseas market share from competitors in South Korea and Taiwan.
The peso reached the lowest level since 2010 this week, dropping to 45.16 per dollar Jan. 16. Bangko Sentral ng Pilipinas is watching the market, Governor Amando Tetangco said in a mobile-phone message Jan. 16 when asked whether the authority is curbing losses in the local currency, which lost 1.4 percent in January in the region’s worst performance.
Elsewhere in Asia, South Korea’s won rose 0.2 percent this week to 1,059.63 per dollar, while Taiwan’s dollar was little changed at NT$30.221. Thailand’s baht gained 0.5 percent to 32.855, Indonesia’s rupiah advanced 0.6 percent to 12,090 and India’s rupee climbed 0.6 percent to 61.5500. China’s yuan closed at 6.0502 compared with 6.0521 at the end of last week.