Ringgit worst performer, rupiah leads Asian currencies gains as Fed bets pared

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HONG KONG/JAKARTA (Oct 18): Indonesia’s rupiah and the South Korean won led gains in Asian currencies this week as investors pushed back bets for higher U.S. interest rates, reducing demand for the greenback.

The Bloomberg Dollar Spot Index fell for a second week in the first back-to-back decline since June as futures showed traders trimmed bets the Federal Reserve will raise its benchmark rate by September 2015 to a 39 percent chance on Oct. 16 from 78 percent odds on Sept. 30. St. Louis Fed Bank President James Bullard said the central bank should consider delaying the end to its bond-buying program as concern abounds that slowing growth in the rest of the world will weigh on the U.S. recovery.

The rupiah advanced 1 percent this week to 12,108 per dollar in Jakarta, as President-elect Joko Widodo, who has pledged to cut fuel subsidies and boost economic growth to at least 7 percent a year, will be inaugurated on Oct. 20. Widodo also met losing candidate Prabowo Subianto in their first public meeting since the July election.

“There seems to be some position adjustment before the weekend and before the inauguration,” said Tsutomu Soma, department manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “In the long term, the main scenario is the Fed is likely to start raising rates sometime next year and the dollar will continue to see appreciation pressure.”

North Asia

South Korea’s won rose 0.4 percent to 1,065.80, prices compiled by Bloomberg show. Thailand’s baht appreciated 0.4 percent to 32.377, while the Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, climbed 0.2 percent.

“We need to see what the Fed actually does in its October meeting and the market is still cautious,” said Ju Wang, Hong Kong-based strategist at HSBC Holdings Plc. “In a very risk-off and high-volatility environment, the North Asia currencies tend to outperform due to less reliance on foreign funding.”

China’s yuan rose for a second week, strengthening 0.11 percent to 6.1240 versus the dollar, after reporting exports that exceeded economist estimates.

Shipments from the world’s second-largest economy increased 15.3 percent from a year earlier in September. That was the best performance since February 2013 and topped the 12 percent median estimate in a Bloomberg survey.

Yuan Gains

The yuan is the sole gainer among the 24 emerging-market currencies tracked by Bloomberg in the past three months. A U.S. Treasury Department report this week said China has shown “some renewed willingness” to let the yuan rise, while adding that the currency “remains significantly undervalued.”

“The gain is largely a reflection of the dollar’s weakness,” said Suan Teck Kin, an economist at United Overseas Bank Ltd. in Singapore. “Export growth was also an encouragement to the market,” he said, adding that he expected the yuan to stay on a “stable appreciation path.”

Malaysia’s ringgit, the Philippine peso and India’s rupee were Asia’s worst performers this week. Global funds pulled a net $2.3 billion this week from stocks in India, Indonesia, the Philippines, Korea, Taiwan and Thailand, exchange data show.

“Worries over slowing global growth led to reduced inflows,” said Anish Vyas, a foreign-exchange analyst at Angel Broking Ltd. in Mumbai.

The ringgit led losses, falling 0.5 percent to 3.2740 per dollar. Malaysian Prime Minister Najib Razak increased fuel prices on Oct. 2 and announced in last week’s budget that a 6 percent sales tax would be implemented in April.

The rupee dropped 0.2 percent to 61.44 versus the greenback as official data showed India’s trade deficit widened to $14.2 billion in September, the most since May 2013. The peso posted a seventh weekly loss, its longest run of declines since 2008, falling 0.3 percent to 44.912.

Elsewhere in Asia, Taiwan’s dollar was little changed at NT$30.42 against the greenback, while Vietnam’s dong fell 0.1 percent to 21,245.