Asian currencies slip against dollar
BENGALURU: Asian currencies weakened against the dollar yesterday, which touched a new 2018 peak as signs of easing trade tensions between the United States and China supported the greenback against its peers.
US Treasury Secretary Steven Mnuchin and President Donald Trump’s top economic adviser Larry Kudlow said an agreement reached by Chinese and American negotiators on Saturday sets up a framework for addressing trade imbalances in the future.
Mnuchin’s reference to trade tensions between the world’s two largest economies being “on hold” supported wider risk sentiment as well as the dollar.
“The latest statement on the ChinaUS trade suggests both parties are happy to avoid the dreaded tit-for-tat escalation while working towards a more market-friendly bilateral trade agreement,” said Stephen Innes, head of trading in Asia-Pacific for Oanda.
However, the easing trade tensions between US and China, while welcome, is unlikely to eclipse the other factors weighing on emerging market currencies, DBS said in a note, as oil prices continue to rise and US Treasury yields remain high.
Indonesia’s rupiah extended losses, falling a further 0.3%, continuing its decline after last week’s interest rate increasee failed to support the currency.
“If Indonesian rupiah pressures mount, this may prompt new measures from policymakers aimed at stabilising the rupiah, including further adjustment in rates,” said Mizuho Bank in a note.
The country’s central bank plans to conduct three foreign exchange swaps this week to ensure liquidity, according to a senior bank official.
The South Korean won slipped 0.8% to 1,086 per dollar, ahead of the country’s central bank’s policy meeting later in the week.
The Indian rupee slipped to 68.08 against the dollar, its lowest since January 2017.
Rising oil prices look set to add to India’s already widening trade deficit, and have kept investors bearish on the rupee.
Thailand’s baht slipped against the greenback, despite data showing the economy growing well above estimates in the first quarter of the year. – Reuters