Asian currencies dropped for a sixth week, the longest declining streak since 2008, as economic data boosted demand for the dollar and supported the case for higher U.S. interest rates.
Malaysia’s ringgit led losses, falling to a five-year low today, as plummeting crude prices threatened the oil exporter’s growth outlook. Indonesia’s rupiah touched a six-year low yesterday and South Korea’s won fell to the lowest level in 15 months earlier in the week as the Federal Reserve’s Beige Book business survey released Dec. 3 showed “widespread” job gains across the world’s largest economy.
The ringgit weakened 2.5 percent from Nov. 28, the most since June 2013, to close at 3.4713 per dollar in Kuala Lumpur, data compiled by Bloomberg show. The rupiah fell 0.8 percent to 12,299, the won depreciated 0.5 percent to 1,113.96 and Taiwan’s currency declined 0.5 percent to NT$31.192. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the most-active currencies excluding the yen, lost 0.2 percent, taking its drop since end-October to 1.4 percent.
“There’s a firmer dollar in general and that’s having a broad-based negative impact on Asian currencies,” said Mitul Kotecha, head of Asia-Pacific currency strategy at Barclays Plc in Singapore. “Being a net exporter of oil, Malaysia suffers more than others.”
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 peers, rose 0.7 percent this week and is up 11 percent since the end of June. Twenty-one of 24 emerging-market currencies followed by Bloomberg have fallen against the greenback this week.
UBS AG cut Malaysia’s growth forecast for 2015 to 4.5 percent, from 5 percent, citing the negative impact of lower oil prices, economists including Singapore-based Edward Teather wrote in a Dec. 3 report. Brent crude has slumped 17 percent in the past month as the Organization of Petroleum Exporting Countries decided against cutting output to bolster prices. Malaysian exports fell 3.1 percent in October from a year earlier, the biggest drop since June 2013, data showed today.
The rupiah faces downward pressure because local units of international companies will need more dollars for income repatriation in the coming weeks, said Heru Irvansyah, an economist at PT BNI Securities in Jakarta
“The tendency is for the rupiah’s weakness to continue as dollar demand steadily increases,” he said.
The Philippine peso was the sole bright spot in the region this week on a seasonal boost in remittances before Christmas. Money sent home by Filipinos living abroad accounts for about 10 percent of gross domestic product. The peso gained 0.9 percent from Nov. 28, the most since August, to 44.528 per dollar, Tullett Prebon Plc prices show. The rally pared its loss this year to just 0.3 percent.
“I wouldn’t be surprised if it closes unchanged for the year,” said Jonathan Ravelas, Manila-based chief market strategist at BDO Unibank Inc., the nation’s largest lender.
Elsewhere in Asia, the Thai baht fell 0.2 percent to 32.927 per dollar and China’s yuan dropped 0.08 percent to 6.1502. India’s rupee strengthened 0.3 percent to 61.8500 and Vietnam’s dong advanced 0.2 percent to 21,345.