Asian currencies languish; rupiah slips to over 16-month low
Reuters|
Updated: Oct 27, 2017, 01.17 PM IST
Asian currencies came under pressure on Friday as the dollar strengthened against the euro after the European Central Bank extended its bond purchases into 2018, diminishing near-term chances of a rate hike in the euro zone.
The ECB prolonged its bond purchases by nine months to September 2018 on Thursday, but promised years of stimulus and even left the door open to backtracking.
ECB chief Mario Draghi made stark contrasting comments from that of the U.S. Federal Reserve, which is poised to raise rates in December as it continues to normalise monetary policy, giving the greenback a boost.
The forward guidance that interest rates would remain unchanged until "well past" the end of the asset purchases kept ECB in the camp of a "dovish taper" and contributed to a classic case of buy the rumour and sell the fact for the euro, OCBC Bank said in a research note.
The euro touched $1.1624, its lowest since July 26, while the dollar index, which tracks the greenback against a basket of six major rivals, added 0.2 per cent to 94.800, trading at three-month highs.
The dollar also got a boost as the U.S. House of Representatives voted on Thursday to clear a procedural path for a Republican tax bill.
Among Asian currencies, the South Korean won weakened the most, while the Taiwan dollar, Malaysian ringgit, Singapore dollar, Chinese yuan and Japanese yen were on track for their second week of losses.
The Indonesian rupiah weakened as much as 0.4 per cent against the dollar, to its lowest in more than 16 months, weighed down by rally in the dollar.
The rupiah was also on track for a second week of losses, losing about 0.8 per cent for the week.
The Philippine peso edged slightly weaker, although hitting a fresh 11-year low, and was set for a fifth week of losses, while the Thai baht eased 0.3 per cent against the dollar.
The ECB prolonged its bond purchases by nine months to September 2018 on Thursday, but promised years of stimulus and even left the door open to backtracking.
ECB chief Mario Draghi made stark contrasting comments from that of the U.S. Federal Reserve, which is poised to raise rates in December as it continues to normalise monetary policy, giving the greenback a boost.
The forward guidance that interest rates would remain unchanged until "well past" the end of the asset purchases kept ECB in the camp of a "dovish taper" and contributed to a classic case of buy the rumour and sell the fact for the euro, OCBC Bank said in a research note.
The euro touched $1.1624, its lowest since July 26, while the dollar index, which tracks the greenback against a basket of six major rivals, added 0.2 per cent to 94.800, trading at three-month highs.
The dollar also got a boost as the U.S. House of Representatives voted on Thursday to clear a procedural path for a Republican tax bill.
Among Asian currencies, the South Korean won weakened the most, while the Taiwan dollar, Malaysian ringgit, Singapore dollar, Chinese yuan and Japanese yen were on track for their second week of losses.
The Indonesian rupiah weakened as much as 0.4 per cent against the dollar, to its lowest in more than 16 months, weighed down by rally in the dollar.
The rupiah was also on track for a second week of losses, losing about 0.8 per cent for the week.
The Philippine peso edged slightly weaker, although hitting a fresh 11-year low, and was set for a fifth week of losses, while the Thai baht eased 0.3 per cent against the dollar.
