HONG KONG/JAKARTA — Indonesia’s rupiah and the South Korean won led gains in Asian currencies this week as investors pushed back bets for higher US 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% chance on Oct 16 from 78% odds on Sept 30. St. Louis Fed Bank president James Bullard said the central bank should consider delaying the end to its bond-buying programme as concern abounds that slowing growth in the rest of the world will weigh on the US recovery.
The rupiah advanced 1% 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% a year, will be inaugurated on Oct 20. Mr 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.”
South Korea’s won rose 0.4% to 1,065.80, prices compiled by Bloomberg show. The baht appreciated 0.4% 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%.
“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% to 6.1240 versus the dollar, after reporting exports that exceeded economist estimates.
Shipments from the world’s second-largest economy increased 15.3% from a year earlier in September. That was the best performance since February 2013 and topped the 12% median estimate in a Bloomberg survey.
The yuan is the sole gainer among the 24 emerging-market currencies tracked by Bloomberg in the past three months. A US 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% 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% sales tax would be implemented in April.
The rupee dropped 0.2% 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% to 44.912.
Elsewhere in Asia, Taiwan’s dollar was little changed at T$30.42 against the greenback, while Vietnam’s dong fell 0.1% to 21,245.