Bloomberg News

Asian Currencies Decline as Odds of U.S. Monetary Easing Recede

March 15, 2012

Asian currencies fell as signs the U.S. recovery is gathering pace damped speculation the Federal Reserve will do more monetary easing, a move that may increase the amount of cash available to be invested in emerging-markets.

India’s rupee led declines as the central bank left interest rates unchanged at a review today, citing inflation risks. A government report today may show the number of Americans applying for jobless benefits fell by 5,000 to 357,000 in the week ended March 10, according to the median forecast of economists in a Bloomberg survey. In Asia, Thailand reported worse-than-expected export numbers for January, while data this week showed Malaysia’s industrial production rose the least since July.

“Good data out of the U.S. supports the view that they may not need to introduce quantitative easing,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “The dollar got a boost across the board.”

The rupee slumped 0.7 percent to 50.2356 per dollar as of 2:13 p.m. in Mumbai, according to data compiled by Bloomberg. The Philippine peso dropped 0.3 percent to 43.00, Malaysia’s ringgit declined 0.2 percent to 3.0583 and South Korea’s won fell 0.1 percent to 1,127.85.

The Fed said this week it expects “moderate economic growth” and predicted the U.S. unemployment rate “will decline gradually.”

Volatility Rebounding

The 60-day historical volatility for the Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies excluding the yen, stood at 3.42 percent, rebounding from 3.3 percent reached on March 12 and March 13 that was the lowest measure of price swings since August.

The rupee dropped to a one-week low after government data showed yesterday that the pace of wholesale-price increases quickened for the first time in five months to 6.95 percent in February.

“In the short term, the Reserve Bank of India’s decision will negatively impact expectations for equity inflows and the rupee,” said Goh Puay Yeong, a Singapore-based currency strategist at Credit Suisse AG.

The won touched a one-month low before trimming losses amid speculation the central bank will intervene to reduce volatility.

“With dollar strengthening, we’re seeing Asian currencies slide,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “Won losses may be limited as exporters sell the dollar to convert income, and as investors are aware that the government may intervene to curb steep currency declines.”

Malaysia’s Output

Malaysia’s ringgit reached a seven-week low on concern growth in Southeast Asia’s third-biggest economy is slowing.

Industrial output rose 0.2 percent in January from a year earlier after increasing 2.9 percent in December, official data showed this week. Consumer prices advanced 2.3 percent in February from a year earlier, the slowest pace since December 2010, according to the median forecast of economists surveyed by Bloomberg News before figures due March 21.

“There will be an economic slowdown given the global environment,” said Hasdi Mamat, a foreign-exchange trader at Bank Muamalat Malaysia Bhd. in Kuala Lumpur. “It’s a question of how sharp the slowdown will be to justify a rate cut. Fundamentally, this will weigh on the currency market.”

Elsewhere, Indonesia’s rupiah, Taiwan’s dollar and China’s yuan were little changed against the greenback at 9,184, NT$29.57 and 6.3300, respectively. The Thai baht held at 30.77 and Vietnam’s dong was unchanged at 20,830.

To contact the reporter on this story: Yumi Teso in Bangkok at

To contact the editor responsible for this story: Sandy Hendry at

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