Rupiah, Baht Lead Monthly Losses in Asian Currencies on Outflows

Asian currencies posted their first monthly loss since August, led by Indonesia’s rupiah and the Thai baht, as concern about current-account deficits and political unrest in the region fueled fund outflows.

The Bloomberg-JPMorgan Asia Dollar Index fell 0.4 percent in November as the rupiah slid the most among 24 emerging-market currencies tracked by Bloomberg. The baht had its worst month since May after the Bank of Thailand unexpectedly cut interest rates this week as anti-government protests weighed on investor confidence. International funds pulled $2.8 billion from Thai, Indonesian and Taiwanese stocks in November through Nov. 28, exchange data show.

“This month’s decline isn’t on the back of large outflows as we saw in June, so it’s mostly due to confidence issues,” said Gundy Cahyadi, a Singapore-based economist at DBS Group Holdings Ltd., referring to the rupiah. “As long as the view remains gloomy, investors will be hesitant to come back in.”

Indonesia’s currency fell 5.8 percent in November to 11,963 per dollar, prices from local banks show. It weakened beyond 12,000 for the first time since March 2009 on Nov. 28. Thailand’s baht depreciated 3 percent to 32.090, Malaysia’s ringgit dropped 2.1 percent to 3.2240 and India’s rupee declined 1.5 percent to 62.45.

Indonesia’s current-account deficit was equivalent to 3.8 percent of gross domestic product in the last quarter, official data show. Bank Indonesia sees a shortfall of 0.25 percent to 2.5 percent of GDP as sustainable, Governor Agus Martowardojo said Nov. 22. The government’s first domestic sale of dollar debt raised less than half the targeted amount this week.

Political Unrest

The Bank of Thailand lowered its benchmark interest rate by a quarter of a percentage point to 2.25 percent this week, a decision not expected by any of the 19 economists surveyed by Bloomberg, amid concern escalated political unrest will hurt the economy. The country’s main opposition party pledged to fully support protests aimed at ousting Prime Minister Yingluck Shinawatra and dismantling the political network of her brother, Thaksin, who was toppled in a 2006 coup.

“While economic conditions don’t look so sound, social unrest is adding to investor concerns,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “There’s some speculation of an additional rate cut, which means the latest reduction may not be enough to boost growth, and we don’t know how the protests will end.”

Tapering Concern

Malaysia’s ringgit dropped for a sixth week, the longest losing streak since 2005, as signs of a pickup in the U.S. economy bolstered speculation policy makers will trim stimulus that’s buoyed emerging markets. A reduction in Federal Reserve debt purchases is the key risk for the ringgit in 2014, and Malaysia’s external balance remains vulnerable to the global environment, Malayan Banking Bhd. analysts led by Singapore-based Saktiandi Supaat wrote in a report yesterday.

“Some of the data that’s been coming out has been quite a bit firmer so that shows the taper risks aren’t blown as far off as markets had hoped for,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “That forms the broad-based backdrop” where investors in “emerging-market currencies are a lot more cautious,” he said.

Elsewhere in Asia, Taiwan’s dollar dropped 0.8 percent in November to NT$29.679 against the greenback and the Philippine peso lost 1.3 percent to 43.772. The South Korean won rose 0.2 percent to 1,058.20, and China’s yuan gained 0.02 percent to 6.0932 as the central bank outlined plans to end normal intervention in the foreign-exchange market. Vietnam’s dong slipped 0.1 percent to 21,100.

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