Asian Currencies in Longest Losing Streak Since January on Fed

By Kyoungwha Kim  

Asian currencies dropped for a third week, the longest run of losses since January, as the prospect of higher U.S. interest rates dims the appeal of emerging-market assets.
Indonesia’s rupiah and Malaysia’s ringgit led the declines after the Federal Reserve on Sept. 17 raised by 25 basis points its median estimate for where the federal funds rate will be by the end of 2015, while pledging to keep it near zero for a “considerable time.” Global funds pulled a combined $1 billion from stocks in Indonesia, South Korea, Taiwan, India and the Philippines this week. Scotland voted to stay in the U.K. in a referendum on independence.
“The key concern is capital outflows from Asia to the U.S.,” said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. “The U.S. could raise interest rates at a faster pace than expected.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks
10 regional currencies excluding the yen against the greenback, fell 0.2 percent this week to 115.74 at 4:32 p.m. in Hong Kong. The rupiah dropped 1.4 percent from Sept. 12 to 11,980 per dollar in Jakarta and the ringgit weakened 1.2 percent to 3.2373. The Philippine peso declined 1.2 percent to 44.43 yesterday, before the country’s financial markets were shut today because of rains and flooding.

Malaysia, Korea

Malaysia would be vulnerable to outflows from emerging markets as overseas investors held 32 percent of government debt as of July, compared with 17 percent in Thailand, according to central bank data.
Bank Negara Malaysia left its key rate at 3.25 percent yesterday, after raising it for the first time in more than three years in July. The decision was predicted by 11 of 21 economists surveyed by Bloomberg, with 10 forecasting a 25 basis-point increase.
“The Fed signaled a higher rate path, whereas Bank Negara stood pat,” said Choong Yin Pheng, senior manager for bonds and economic research at Hong Leong Bank Bhd. in Kuala Lumpur. “That’s driving down the ringgit.”
South Korea’s won fell 0.9 percent this week in the longest run of losses since May 2013, and dropped 0.2 percent today to 1,044.70 per dollar in Seoul, data compiled by Bloomberg show. It fell as much as 0.5 percent to 1,047.85 today, the weakest level since April.

Yuan Weakens

The currency pared losses after Scotland voted to remain in the U.K. in an independence referendum, said Park Daebong, a Seoul-based currency trader at Nonghyup Bank. Some 55 percent of Scottish voters supported the “no” campaign compared with 45 percent who backed independence.
In Shanghai, the yuan fell 0.1 percent this week to 6.1405 per dollar, China Foreign Exchange Trade System prices show. The People’s Bank of China started providing 500 billion yuan ($81 billion) of funds to the nation’s five largest lenders this week, a government official familiar with the matter said.
Elsewhere in Asia, Taiwan’s dollar depreciated 0.6 percent from Sept. 12 to NT$30.258 against its U.S. counterpart and India’s rupee fell 0.3 percent to 60.8325. Thailand’s baht and Vietnam’s dong were little changed at 32.232 and 21,205, respectively.