Peso Leads Weekly Drop in Asian Currencies on Ukraine, U.S. Data

The Philippine peso led a weekly decline in Asian currencies as tensions in Ukraine and the Middle East and improving U.S. data spurred dollar demand.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, fell 0.1 percent in the past five days, a second weekly decline. The peso dropped 0.8 percent from Aug. 1 to 44.13 per dollar, India’s rupee declined 0.3 percent to 61.3675, while China’s yuan advanced 0.4 percent to 6.1564.

Russian President Vladimir Putin this week countered U.S. and European sanctions over a pro-Russian insurgency in Ukraine with a ban on the import of a range of food products, while U.S. President Barack Obama authorized air strikes in Iraq yesterday. Reports this week showed U.S. service industries grew at the fastest pace since 2005 and the trade deficit narrowed unexpectedly in June.

“Asian currencies weakened this week due to an overall sense of risk aversion in global markets due to escalating tensions in Ukraine and as solid U.S. data revived fears over an early rate hike” by the Federal Reserve, said Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong.

The peso fell 0.1 percent yesterday and touched a three-month low of 44.278 per dollar after the World Bank yesterday cut its growth forecasts for the Philippines for 2014 and 2015 to 6.4 percent and 6.7 percent, respectively, from previous estimates of 6.6 percent and 6.9 percent, citing weak spending and tighter monetary policy.

Stock Outflows

Global funds sold $59 million more Philippine stocks than they bought this week and offloaded $436 million of Taiwanese equities, according to exchange data.

The yuan in Shanghai strengthened 0.08 percent yesterday as official data showed China’s exports grew for a fourth straight month and the trade surplus widened to a record. Overseas shipments increased 14.5 percent from a year earlier in July, the Beijing-based customs administration said, compared with the median projection of 7 percent in a Bloomberg survey. Imports dropped 1.6 percent, leaving an excess of $47.3 billion.

Elsewhere in Asia, South Korea’s won gained 0.1 percent this week to 1,036.45 in Seoul, Malaysia’s ringgit strengthened 0.1 percent to 3.2078. Taiwan’s dollar and Vietnam’s dong were steady at NT$30.066 and 21,215, respectively. Indonesia’s rupiah fell 1.8 percent to 11,788 from July 25. Financial markets in Jakarta were closed last week for the Eid holiday.

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