EM ASIA FX-MYR, IDR Lead Asia FX Losses; TWD Up On Export Orders

Oct 21 Most emerging Asian currencies fell on Wednesday as sustained concerns over slowing global growth continued to hit commodity prices.

Malaysia’s ringgit and Indonesia’s rupiah fell to two-week lows, leading regional losses, reflecting their positions as the region’s major commodity exporters.

The Taiwan dollar bucked the regional depreciation trend after news on Tuesday that the island’s export orders
fell far less than expected in September with orders from Europe turning to growth. Commodity prices stayed under pressure as more evidence showed that a sluggish China’s economy bit into Asian trade. Japanese exports in September grew at the slowest pace since mid-2014, mainly due to weakness in China.

Gloomy economic data may deter investors from seeking higher yields in Asia, analysts said. Most emerging Asian currencies have risen so far this month as expectations of U.S. interest rate hike this year waned.

“Although the recent net portfolio inflow situation is mildly supportive, we think this may be quickly eroded if risk
appetite sours or the broad USD resilience resumes,” wrote Emmanuel Ng, a foreign exchange strategist with OCBC Bank.

The U.S. dollar retreated broadly as the euro rose after solid euro zone data tempered expectations of further easing by the European Central Bank. But there was positive U.S. news as well with housing starts increasing 6.5 percent in September to an annual pace of 1.21 million units, beating expectations for 1.15 million units.


The ringgit lost 0.7 percent to 4.2950, its weakest since Oct 7, as government bond prices fell. Low crude oil prices added to concerns over Malaysia’s exports. The country is a major supplier of natural liquefied gas and palm oil. The Malaysian currency may weaken to 4.3273, the 61.8 percent Fibonacci retracement of its appreciation from Sept 29
to Oct 9, as it breached the 50 percent level at 4.2810, analysts said.


The rupiah slid up to 0.6 percent to 13,715 per dollar, its weakest since Oct 8. The Indonesian currency came under further pressure as local companies are likely to increase dollar purchases for month-end payments. Most government bond prices slid. The official Jakarta Interbank Spot Dollar Rate, which the central bank introduced in 2013 to manage exchange rate fluctuations, was fixed at 13,696, weaker than the previous 13,634. The rupiah pared some of earlier losses as Jakarta shares rose 1.2 percent, extending gains for the fifth consecutive session.


The Taiwan dollar advanced after foreign investors were net buyers in the local stock market in the previous four
consecutive sessions. Foreigners purchased a combined net T$27.0 billion ($834 million) worth of equities, the Taiwan Stock Exchange said.

Exporters were also lined up to buy Taiwan dollars for month-end payments at around 32.400 per the U.S. dollar, traders
said. The Taiwan dollar’s gains were limited as foreign financial institutions bought the greenback, although the amount was small with the local stocks down. Traders stayed cautious over possible intervention by the central bank to stem strength in the best-performing emerging Asian currency so far this year.


Thailand’s baht edged up on demand from foreigners linked to their purchases of local stocks and bonds. On Tuesday, foreign investors turned net buyers in equity and bond markets. Exporters were on the sidelines as they already bought the baht for settlements when it was weaker than 36.00 per dollar, traders said.


Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell