Asia’s biggest currency run in 2 decades may end soon
SINGAPORE: Asian currencies may be on the verge of a correction after completing the best year in at least two decades. The warning sign? The rupiah slumped to a two-year low last week.
The rupiah is seen as a bellwether of sorts for Asia given the high foreign ownership of Indonesia’s bonds and its largely open economy.
The rupiah tumbled 1.5 per cent in the past month, the worst performer in Asia and thirdworst among 24 emerging-market currencies worldwide.
“Rupiah is arguably the highbeta version of Asian ex-Japan risks,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd, here.
Regional currencies may suffer due to a resurgent dollar. The greenback has rallied since new US Federal Reserve chairman Jerome Powell delivered upbeat testimony to lawmakers last week.
There are signs other Asian currencies are also starting to weaken, with the Philippine peso dropping to the weakest since July 2006 last month.