The Indian rupee fell towards record lows on Tuesday, leading slides among emerging Asian currencies with Southeast Asian units at multi-year lows as concerns over possible U.S. military action against the Syrian government dented risk sentiment.
The rupee slid after the lower house of Parliament approved a plan worth nearly $20 billion to provide cheap grain to the poor. The Indonesian rupiah hit a fresh four-year low on corporate dollar demand. The Malaysian ringgit touched its lowest in more than three years on selling by foreigners, while the Thai baht hit a three-year low on capital outflows. The Philippine peso fell to its weakest in more than two and a half years as local stocks plunged.
“Syria escalated geopolitical risks and appetite for a safe haven. That will put pressure on Asian currencies,’’ said Jeong my-young, Samsung Futures research head in Seoul. “Some of them, like the rupee and the rupiah, are unlikely to see a recovery as their problems are not a short-term liquidity issue. Even though they do their best, it will take a long time to stabilise their economies,’’ said Mr. Jeong. The two currencies were most vulnerable to an anticipated withdrawal in quantitative easing by the Federal Reserve due to India and Indonesia's widening current account deficits, slowing economic growth and strong resistance to implementing much-needed reforms.
Southeast Asian currencies have suffered capital outflows due to deteriorating economic fundamentals. U.S. durable goods orders reported their biggest drop in nearly a year in July, but the data barely changed views that the Fed may dial down its stimulus programme as early as next month.
The rupiah lost 0.6 per cent to 10,900 a dollar, its weakest since April, 2009, in the local inter-bank market. Jakarta stocks fell nearly 3 per cent. Forwards markets pointed to further declines in the rupiah with one-month non-deliverable forwards per dollar weakening to 11,708, its lowest since April 2009.
The ringgit lost as much as 0.6 per cent to 3.3300 a dollar, its weakest since June, 2010, on selling from foreigners. The Malaysian currency managed to stay firmer than the intraday low as the central bank was spotted buying the currency, traders said, adding that the ringgit was expected to weaken further.
The baht fell up to 0.7 per cent to 32.160 to the greenback, its weakest since August, 2010, pressured by capital outflows and dollar demand from importers. The baht’s slide was limited as the central bank was spotted in the market, but it is on a falling trend, traders said.
The Thai currency is expected to weaken to 32.425.
The peso fell 0.4 per cent to 44.445 a dollar, its softest since January, 2011, as Manila stocks lost more than 4 per cent. Three-, five- and 10-year government bond yields also rose. The peso is not immune to weakness in the regional currencies, but some traders said the Philippines may see smaller outflows than other Southeast Asian countries. — Reuters