Rupee, Ringgit Slide as Hurricane Shuts U.S. Markets; Yuan Rises
India’s rupee and Malaysia’s ringgit slid the most among Asian currencies as Hurricane Sandy forced the U.S. to shut equity markets, while China’s yuan rose to a 19-year high on signs of a pickup in the global economy.
The U.S. securities industry canceled trading on all markets today, moving to protect workers as the storm barreled toward New York City with 70-mile-per-hour winds. The country holds its presidential election on Nov. 6, and Democratic Senator Mark Warner of Virginia said the weather would “throw havoc” into the race.
“There’s general risk aversion,” said Enrico Tanuwidjaja, an economist in Singapore at Royal Bank of Scotland Group Plc. “This is the final week before the U.S. election. If financial markets in the U.S. will be closed for a prolonged period because of Hurricane Sandy, people would like to hold dollars.”
India’s rupee dropped 0.8 percent to 54.0175 per dollar as of 3:59 p.m. in Mumbai, according to data compiled by Bloomberg. The ringgit weakened 0.6 percent to 3.0615, while the Philippine peso fell 0.1 percent to 41.245. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, slid 0.1 percent.
India’s rupee earlier touched 54.08, its lowest level in a month, on speculation importers stepped up dollar purchases to pay month-end bills.
Importers Buy Dollars
Demand for the greenback increased as trading resumed after a three-day break due to a local holiday, and the rupee may pare its losses if inflows into the stock market increase, according to Edelweiss Financial Advisors Ltd. Investors are awaiting the Reserve Bank of India’s monetary policy review tomorrow, and the Indian currency could surge in the event of an interest-rate cut, it said in a report today.
The RBI will keep its repurchase rate at 8 percent tomorrow, according to 16 of 28 economists surveyed by Bloomberg. Eleven expect a 25 basis point reduction and one predicts a half percentage point cut. The central bank will lower lenders’ reserve requirements to 4.25 percent from 4.50 percent, according to 18 of the analysts, while eight see no change and two forecast a cut to 4 percent.
The U.S. economy grew at a 2 percent annual rate in the third quarter, faster than the 1.8 percent median estimate in a Bloomberg News survey, official figures showed Oct. 26. The net income of Chinese industrial companies rose 7.8 percent in September from a year earlier, the first increase in six months, according to a report released Oct. 27 in Beijing.
The yuan gained 0.08 percent to 6.2436 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.2371 earlier, the strongest level since the government unified the official and market exchange rates at the end of 1993.
Yuan positions at local lenders accumulated from sales of foreign exchange to the central bank, an indicator of investment inflows, rose 130.7 billion yuan ($21 billion) to 25.77 trillion yuan in September, after two months of declines, according to official data released Oct. 19. Reports this month showed a pickup in retail sales, manufacturing and exports, while the Chinese currency has rallied 2 percent since the end of July.
“This round of appreciation reflects the renewed confidence that the economy is recovering,” said Nizam Idris, head of Asian fixed income and foreign-exchange at Macquarie Bank Ltd. in Singapore. “If you look at the new banking sector foreign-exchange purchases, numbers are suggesting inflows are returning,” said Idris, adding that he forecast the yuan would end the year at a similar level to where it is today.
Elsewhere, Taiwan’s dollar closed at NT$29.292 against its U.S. counterpart, compared with NT$29.30 at the end of last week. Indonesia’s rupiah was little changed at 9,609, while Thailand’s baht was steady at 30.74. South Korea’s won appreciated 0.1 percent to 1,095.90.
To contact the reporter on this story: Lilian Karunungan in Singapore at firstname.lastname@example.org