SINGAPORE, Aug 21: The Indonesian rupiah hit a four-year low on Wednesday on bond outflows and dollar demand from importers amid thin greenback liquidity, while investors kept an eye on the psychologically important 11,000 support level.
The Malaysian ringgit turned weaker before the country’s second quarter current account and growth data later in the day. The Thai baht hit another 13-month low on selling from real money and hedge funds.
Spot rupiah fell as much as 0.7 percent to 10,760 per dollar, its weakest since April 2009. The Indonesian currency’s one-month non-deliverable forwards to the greenback also weakened to 11,350, its lowest since the period.
Pressure on the rupiah intensified with 10- and 5-year bond yields higher, although state-run banks on behalf of the central bank sold dollars to support the rupiah. Some traders placed dollar bids higher than interbank levels.
‘The market is very scary, although I don’t want to the rupiah to melt down,’ said a Jakarta-based trader.
The rupiah is seen heading to 11,000, given continuous capital outflows, after weakening past a chart support area around 10,650-10,700, traders and analysts said.
The unit also has the 61.8 percent Fibonacci retracement at 11,017 of its appreciation between 2008 and 2011.
But the 11,000 is unlikely to be safe, given thin liquidity, some traders said.
‘Liquidity is very bad,’ said a currency trader in Jakarta when asked if 11,000 would be broken.
The rupiah and India’s rupee were seen as the most vulnerable to the U.S. Federal Reserve’s withdrawal of monetary stimulus, due to widening in their current account deficits and other economic concerns.
After those currencies, the Malaysian ringgit and the Thai baht would be the next victims in Southeast Asia because of high fiscal deficits, slowing economic growth and high foreign ownership of government bonds.
Reflecting the worries, the ringgit and baht fell although the dollar held steady against the yen and hovered near a half-year low against the euro.
Investors awaited minutes of the U.S. Federal Reserve’s latest meeting for clues on its policy outlook.
RINGGIT
The ringgit started the day slightly firmer as a broad dollar weakness caused short-covering.
But the Malaysian currency turned weaker as real money and leveraged funds sold it. Local investors also bought dollars.
It managed to hold stronger than 3.3000 per dollar on caution over possible intervention by the central bank to support it and exporters’ demand for settlements.
The immediate focus is the second-quarter economic data. Economic growth likely picked up in April-June as activity recovered after a tense national election, but skittish investors could focus more on signs that weak exports are pushing the current account towards a deficit.
In the event of a current account deficit ‘there could be perhaps some selloff in the Malaysian ringgit-denominated government bonds,’ said Kelvin Tay, regional chief investment officer at UBS Wealth Management in Singapore.
‘But I don’t think it will be at the kind of stress levels that you saw in Indonesia because the domestic market is actually very deep in Malaysia. So they can actually absorb any selloff in the market.’
BAHT
The baht lost as much as 0.5 percent to 31.79 per dollar, its weakest since July 2012 as offshore funds sold it.
The Thai currency pared some earlier losses as agent banks of the central bank were spotted selling dollars around the baht’s session low, traders said.
(AGENCIES)
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