Global equity turmoil weighs on most Asian currencies

Only the Thai baht firmed in the region, by a marginal 0.1 per cent. – AFP pic
Only the Thai baht firmed in the region, by a marginal 0.1 per cent. – AFP pic

SINGAPORE, Feb 9 — Most Asian currencies weakened against the US dollar today as regional equity markets were hit by a fresh wave of selling and investors retreated from riskier assets globally.

Another plunge in US stocks overnight, triggered by a jump in bond yields and fears of sharper interest rate rises, left Asian markets in a sea of red.

“The issue is not so much the 3 per cent level (of US benchmark bond yields) but rather the pace that bond yields have been rising in the US that is sending the markets into disarray,” said Stephen Innes, head of trading for Asia Pacific at OANDA in a note.

“The rapidity of the moves has caught the markets by surprise, and we are going through the predictable panicked repricing of most asset classes.”

Benchmark 10-year note yields rose as high as 2.884 per cent on Thursday, nearing a four-year high.

Worsening risk sentiment and higher volatility also means many market players are now being forced to close their existing positions rather than making new bets.

The re-rating of assets has had repercussions across Asia as the MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2.3 per cent to a two-month low.

South Korea's won was 0.3 per cent weaker against the US dollar as the country's benchmark equity index touched its lowest in the day since September 2017.

The Malaysian ringgit shed 0.3 per cent as factory output in December rose at a much slower pace than anticipated by a Reuters poll.

The Singapore dollar repeated yesterday's performance as it slipped 0.1 per cent as equities lost as much as 2.2 per cent.

Meanwhile, the Indian rupee was 0.2 per cent weaker, weakening for the second straight week.

Only the Thai baht firmed in the region, by a marginal 0.1 per cent. Thailand is due to report data on its foreign exchange reserves later in the day.

Philippine peso

The Philippine peso was hit the hardest in the region as it weakened 0.6 per cent with the main stock index sliding as much as 2.6 per cent.

The currency saw its the worst day since June, 2016, today. Trade data for December 2017 ensured the full-year trade deficit widened to a record as imports for the year jumped 10.2 per cent.

Bangko Sentral ng Pilipinas, Philippine's central bank, held interest rates steady on yesterday and poured cold water on expectations that it will hike this year.

Chinese yuan

China's yuan weakened 0.2 per cent against the US dollar as equity markets sank.

The benchmark Shanghai Composite Index tumbled as much as 5.9 per cent at one point to a nine-month low before recouping some losses, while the blue-chip CSI300 dived as much as 6.2 per cent.

China's central bank said today it has released temporary liquidity worth almost 2 trillion yuan (RM1.245 trillion) to satisfy cash demand before the long Lunar New Year holidays. — Reuters

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