Asian currencies fell for a second week as the prospect of higher U.S. interest rates and worsening conflicts in the Middle East and Ukraine boosted demand for the relative safety of the dollar.
Ukraine’s government said pro-Russia rebels shot down a Malaysian Airlines plane yesterday, killing all 298 people on board, while Israel sent ground troops into Gaza as a cease-fire with Palestinian militants collapsed. The reports sparked losses in emerging-market currencies and stocks, while buoying assets such as Treasuries. (USGG10YR) Federal Reserve Chair Janet Yellen said July 15 that U.S. borrowing costs could be raised sooner than expected should the job market keep improving.
“People are avoiding emerging-market assets following the escalation of geopolitical risk in the Middle East,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The plane crash didn’t help sentiment.”