SINGAPORE, Nov 21: The Indonesian rupiah hit its lowest point in nearly five years on Thursday as most emerging Asian currencies slid on renewed expectations that the U.S. Federal Reserve may soon begin scaling back its stimulus.
Regional currencies also came under pressure as activity in China’s factory sector grew at a milder pace in November, indicating the world’s second-largest economy could lose some momentum in the fourth quarter.
The rupiah fell on month-end dollar demand from local companies, while the Jakarta Interbank Spot Dollar Rate (JISDOR) was fixed at a record low.
The Malaysian ringgit and the Thai baht slid on weaker stocks and lower bond prices. The South Korean won eased due to selling by offshore funds and custodian banks.
Asian shares fell after minutes from the Fed’s latest meeting indicated that officials could decide to start scaling back its asset purchases at one of its next few meetings provided this was warranted by economic growth.
‘The minutes showed the Fed was tilted towards slightly hawkish, leading to UST yields to rise and dollar to strengthen,’ said Saktiandi Supaat, head of FX research for Maybank in Singapore.
‘Asian currencies will likely remain vulnerable to any taper concerns and policy exit strategies into 2014 until the eventual convergence of the global economy’s positive effects on Asian economies become more apparent.’
Regional currencies failed to find support from recent dovish comments by top Fed officials including chair nominee Janet Yellen as solid U.S. Data kept alive expectations of an early shift in the Fed’s stimulus.
RUPIAH
The rupiah fell 0.7 percent to 11,725 per dollar, its weakest since March 2009, with the JISDOR fixed at 11,717, compared with the previous 11,631.
The Indonesian currency also weakened in the non-deliverable forwards (NDFs) markets.
Spot rupiah in the local market pared some losses as one trader in Jakarta said the central bank was suspected of intervening through state-run banks to support the currency.
‘I do not want to be too long-dollar here,’ said the Jakarta-based trader.
‘All the bad news was out and the next year is Yellen’s era. And state-run banks are firm up at 11,720 to 11,725,’ the trader added.
Still, the rupiah is expected to stay weaker although exporters were showing some interest, traders said.
‘It looks good to add dollar holdings for a short-term target of 11,775,’ said another trader.
RINGGIT
The ringgit slid, tracking its weakness in NDFs markets.
Five- and 10-year government bond yields rose, while Malaysian stocks slid.
‘The game is to buy the dollar and the question is where,’ said a senior Malaysian bank trader in Kuala Lumpur, adding that the ringgit will end the year weaker than the current level.
BAHT
The baht lost as much as 0.5 percent to 31.80 per dollar, its weakest since Sept. 17.
Bangkok shares lost nearly 1 percent, underperforming most regional peers.
The five-year bond yield rose 6 basis points (bps) to 3.80 percent, while the 10-year yield advanced 9 bps to 4.21 percent. Both were at their highest since Sept. 18.
The local securities industry has expressed worries over the effect of a rice-buying scheme on Thailand’s sovereign ratings, saying the country is at risk of a downgrade, the Bangkok Post reported.
WON
The won fell as foreign investors were poised to become net sellers in Seoul’s main stock market after two sessions of net buying.
South Korean exporters, however, took the decline as a chance to buy the won for month-end settlements on dips, limiting its downside.
(AGENCIES)
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