SINGAPORE, July 19: The Indonesian rupiah hit a near four-year low on Friday, leading declines among emerging Asian currencies for the day and the week as the region may see more capital outflows on expectations of the Federal Reserve’s reduction in stimulus.
The rupiah stayed under pressure from dollar demand from local companies, although the central bank was spotted intervening to limit its downside.
The Malaysian ringgit and the Singapore dollar also fell in thin trading as investors covered short positions in the greenback before the weekend.
The South Korean won and the Taiwan dollar bucked regional declines, helped by local exporters.
But the North Asian currencies are not free of worries from the more dismal outlook on overall emerging Asian currencies, traders and analysts said.
Japan’s appetite for foreign assets grew with the country’s investors net buyers of foreign bonds for a second straight week last week by purchasing the largest amount since September 2012.
Still, it is premature to expect inflows of the money to emerging Asian assets, analysts said.
‘It looks difficult for the Japanese to increase their Asia allocation given weak growth momentum and the Fed,’ said Jeong My-young, Samsung Futures research head in Seoul.
‘In the very, very long term, we may see Japanese money going to other parts of Asia. But it is too early to expect it now,’ Jeong added.
Federal Reserve Chairman Ben Bernanke said on Wednesday the U.S. Central bank still expects to start scaling back its monthly bond-buying of $85 billion a month later this year although he left open the option of changing that plan if the economic outlook shifted.
Most emerging Asian currencies are on course to post weekly declines, led by the rupiah.
The rupiah’s indicative price fell 0.9 percent against the dollar so far this week, according to Thomson Reuters data. If the loss is maintained, that would be the largest weekly fall since the period ended June 1, 2012.
The Indian rupee has also lost 0.4 percent so far this week, even though the central bank and the government took steps to stabilise the ailing currency.
The rupiah and rupee currencies were seen more vulnerable to capital outflows on the Fed’s policy shift due to worries about their current account deficits.
During the last two weeks, short positions in the two units increased with bearish bets on the rupiah at the highest level since November 2008, a Reuters poll showed on Thursday.
For the week, the ringgit has declined 0.8 percent to the dollar, while the Singapore dollar has fallen 0.4 percent.
RUPIAH
The rupiah’s indicative prices lost as much as 0.5 percent to 10,100 per dollar, the weakest since September 2009 on corporate dollar demand. Foreign banks also bought the greenback.
The Indonesian currency traded weaker than the prices in thin liquidity with some banks bidding dollars above 10,400, traders said.
The central bank was spotted providing dollars and some exporters joined the selling, but they were not seen enough to satisfy dollar demand, they added.
‘Definitely, if BI doesn’t supply enough dollars,’ a trader said when asked if the rupiah is expected to weaken further.
‘Dollar supply is limited. There is no interbank market. Where can we get dollar supply if it is not from BI?’
On Thursday, Bank Indonesia said it raised $600 million in its first currency swaps auction, well above its indicative target of $500 million, in an effort to increase ammunition for the defence of its currency.
SINGAPORE DOLLAR
The Singapore dollar edged weaker as a break of 1.2690 to the greenback prompted some stop-loss selling in thin liquidity, traders said.
Still, the city-state’s currency cut much of its initial slide as it has a chart support at 1.2714, the 50 percent Fibonacci retracement of its appreciation in July.
RINGGIT
The ringgit eased on caution over bond outflows and as investors covered short dollar positions before the weekend.
Earlier weakness in the Singapore dollar also weighed on the Malaysian currency, traders said.
‘People were back to buying USD with some custodian outflows on MYR bonds and better U.S. Sentiment,’ said a foreign bank trader in Singapore.
But the ringgit recovered most of its initial losses as it found a trendline support around 3.0250 per dollar, another trader in Kuala Lumpur said.
WON
The won rose on demand from local exporters for settlements and as investors covered short positions before the weekend.
Earlier, the South Korean currency fell on dollar bids from importers for payments.
But the local unit turned higher on expectations that it would find more support from month-end corporate demand, traders said.
‘Exporters’ support may be stronger next week as the month-end is approaching,’ said a senior foreign bank trader in Seoul.
TAIWAN DOLLAR
The Taiwan dollar rose in thin trade from Thursday’s close. Traders said the central bank had pushed it lower through intervention in the prior session.
Taiwanese exporters showed interest in buying the currency when it was weaker than 30.000, traders said.
But foreign financial institutions and domestic importers bought U.S. Dollars on dips, limiting the Taiwan dollar’s upside.
(AGENCIES)
Follow our WhatsApp channel
