Emerging Asian currencies and bonds have been under pressure from the greenback’s strength amid expectations that U.S. President-elect Donald Trump’s policies to boost fiscal spending will lift inflation and interest rates. U.S. Treasury yields were already rising despite the recent pullback.
His protectionist stance on trade has also been hurting the currencies of Asia’s export-reliant economies.
“Regional outflows should persist given the uncertainties around U.S. interest rate trajectory and President-elect Trump’s trade policies,” said Stephen Innes, senior FX trader for FX broker OANDA in Singapore.
“The fear of massive redemptions may accelerate the feedback loop if local EM conditions continue to deteriorate, which will put additional pressure on regional bond and equity markets.”
The ringgit lost 0.6 percent to 4.4430 per dollar, its weakest since Oct. 2, 2015.
The Malaysian currency came under further pressure from dollar demand from importers for payments.
Currency traders were little fazed by data on Tuesday showing the country’s international reserves rose in the first two weeks of November, even though reserves are expected to fall on surging capital outflows.
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