Asian currencies had their third weekly decline, led by Malaysia’s ringgit, amid concern a global bond rout and Greece’s deferral of debt payments will reduce investor demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.2 percent this week as European Central Bank President Mario Draghi Wednesday flagged faster euro-area inflation. Ten-year German bund yields climbed 40 basis points from May 29 as the rate on similar-maturity U.S. Treasuries rose 23 basis points. Investor attention turned to China as Janus Capital Group Inc.’s Bill Gross took to Twitter to say shares on the technology-heavy Shenzhen bourse are the next big trade for short sellers.
“The volatility in German bund yields drove global yields higher,” said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. “That contributed to softer Asian currencies. Bill Gross’s statement that China stocks were the next big short affected market sentiment as well.”
The ringgit slid 1.5 percent this week to 3.7218 a dollar as of 4:26 p.m. in Kuala Lumpur, data compiled by Bloomberg show. The Philippine peso retreated 0.6 percent and the Indonesian rupiah and Taiwan dollar dropped 0.5 percent.
Foreign funds sold a net $1.2 billion of stocks this week through Thursday in Taiwan, Thailand, Indonesia and the Philippines, exchange data show.
Greece became the first country since the 1980s to defer a payment to the International Monetary Fund, with the prime minister saying he would address parliament Friday amid a lack of progress in talks with creditors.
“The risk-aversion with regards to Greece is hovering,” said Leong Sook Mei, Singapore-based Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi UFJ. “There are still a lot of dollar bids on the whole.”
The ringgit fell for a third week as crude prices slumped 5.8 percent from May 29. Malaysia derives 22 percent of state revenue from energy-related sources.
“Malaysia is the most exposed to lower commodity prices, in particular oil,” said Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong. “With the Greece negotiations getting pushed back, that should see payrolls as the key driver of markets.”
A report due Friday will show U.S. employers added more than 200,000 jobs for a second month in May, according to a Bloomberg survey, supporting the case for the Federal Reserve to move ahead with interest-rate increases.
Elsewhere in Asia, South Korea’s won fell 0.3 percent this week, Thailand’s baht declined 0.1 percent and China’s yuan dropped 0.07 percent. India’s rupee weakened 0.1 percent, while Vietnam’s dong was little changed.