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EM ASIA FX-US fiscal woes weigh on rupiah, won as investors cut risk
November 8, 2012 / 6:57 AM / 5 years ago

EM ASIA FX-US fiscal woes weigh on rupiah, won as investors cut risk

* Rupiah down on corp dlr demand; BI spotted capping slide
    * Won falls on profit-taking, but exporters buy on dips
    * Ringgit slide; expected to leave rates

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Nov 8 (Reuters) - The Indonesia rupiah and the
South Korean won led a broader fall across emerging Asian
currencies on Thursday as investors, concerned about a looming
fiscal crisis in the United States, cut back on risky assets
including stocks.
    With the U.S. presidential election out of the way, the
focus has shifted to the "fiscal cliff" of nearly $600 billion
worth of spending cuts and tax increases set for early 2013,
which investors fear could push the world's top economy back
into a recession.
    The Indonesian rupiah fell 0.4 percent against the
dollar as corporates bought the greenback, and later, the
country's central bank intervened to stem its fall, traders
    The won and the Malaysian ringgit also lost
ground as investors worried that the problems in the United
States would feed into the global economy, just as signs are
emerging that the slowdown is easing in Asia.
    "If the cliff continues to loom, the overriding concern is
that a global appetite destruction will overwhelm economic
improvements in Asia," said Emmanuel Ng, a foreign exchange
strategist at OCBC Bank in Singapore.
    The rupiah and the Indian rupee were more
vulnerable than other emerging Asian currencies due to the large
current account deficits that the two countries ran, Ng said.
    The rupiah and the rupee were the two worst performers in
the region so far this year, weakening 6.0 percent and 2.5
percent against the dollar respectively, according to Thomson
Reuters data.
    Asian shares were also weaker on Thursday while the
safe-haven dollar and the Japanese yen as well as U.S.
Treasuries found support on lower risk appetite. 

    The rupiah fell on sustained dollar demand from corporates,
although the central bank was spotted providing greenbacks
through state-run banks, dealers said.
    Some dealers said the authority may allow gradual weakness
in the rupiah to help exports, even though it will keep
controlling the pace of depreciation.
    On Monday, Bambang Brodjonegoro, the head of the fiscal
office at the finance ministry, said the ministry is
"comfortable" with the current level of the rupiah as it may
ease the country's trade imbalance. 
    "The comments gave a sense to most market players that the
government is OK with the current level. It seems they don't
mind if the rupiah weaken to 9,700 (per dollar) by year-end,"
said a Jakarta-based dealer.
    The won slid as investors covered dollar-short positions,
with the South Korean currency technically seen overbought.
    The 14-day dollar/won relative strength index (RSI) stood at
29.9, still slightly below the 30 threshold, indicating the pair
has been excessively sold.
    But domestic exporters including shipbuilders bought the
local unit for settlements on dips.
    "The won is seen falling further if we consider only
external factors, but it is unlikely to extend the slide, given
exporters' deals," said a South Korean bank dealer in Seoul.
    On Wednesday, the won hit a 14-month high against the dollar
helped by demand from offshore funds as Obama's victory ensured
sustained quantitative easing by the Federal Reserve, which is
expected to keep bringing funds to emerging Asia.
    The ringgit eased as offshore funds and local interbank
speculators sold the Malaysian currency.
    The selling came even after data showing the country's
industrial output rose a higher-than-expected 4.9 percent.
    Investors hesitated to add bets either way before the
central bank's policy meeting later in the day.
    The central bank is expected to keep its policy rate
unchanged for a ninth consecutive time as domestic demand and
government spending is seen shoring up the economy despite weak
exports, a Reuters poll showed. 
  Change on the day at 0610 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        79.85          80.00       +0.19
  Sing dlr        1.2240         1.2225       -0.12
  Taiwan dlr      29.110         29.200       +0.31
  Korean won     1089.40        1085.40       -0.37
  Baht             30.69          30.67       -0.07
  Peso             41.08          41.06       -0.04
  Rupiah         9635.00        9600.00       -0.36
  Rupee            54.47          54.21       -0.48
  Ringgit         3.0600         3.0505       -0.31
  Yuan            6.2429         6.2437       +0.01
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        79.85          76.92       -3.67
  Sing dlr        1.2240         1.2969       +5.96
  Taiwan dlr      29.110         30.290       +4.05
  Korean won     1089.40        1151.80       +5.73
  Baht             30.69          31.55       +2.80
  Peso             41.08          43.84       +6.73
  Rupiah         9635.00        9060.00       -5.97
  Rupee            54.47          53.08       -2.54
  Ringgit         3.0600         3.1685       +3.55
  Yuan            6.2429         6.2940       +0.82
 (Additional reporting by Yena Park in SEOUL and IFR Markets'
Catherine Tan; Editing by Sanjeev Miglani)

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