Asia's emerging currencies slide on Fed’s mixed signals

Currencies in emerging Asia slid further on Thursday after traders took mixed messages on the US Federal Reserve's stimulus programme, even as upbeat Chinese manufacturing data provided support, reports AFP. The Indian rupee sank to a new record low of 65.27 to the dollar before recovering to 64.55. The Indonesian rupiah traded at 10,958 to the dollar against 10,945 a day earlier, while the Thai baht was at 32.12, compared with 31.77. Minutes from the Fed's July policy meeting showed board members had differing opinions on when to wind down its $85 billion a month bond-buying, known as quantitative easing (QE). Some back a "taper" as soon as next month, while others said the bank needed to see more evidence the US economy was strong enough. Fed boss Ben Bernanke has said it will not reel in the scheme until the economy can stand on its own two feet and unemployment is below seven percent.

"I personally didn't think the minutes gave any clear indication of whether tapering will begin next month or not, but the market reacted anyway with falls in shares, rise in yields and dollar-buying," said Kengo Suzuki, currency strategist at Mizuho Securities. Expectations of an end to QE have seen foreigners in recent months repatriate some of the vast sums that poured into emerging economies when it was unveiled in September 2012, in turn hitting currencies and equities.