sian currencies headed for biggest quarterly loss since 1997 crisis, battered by China's devaluation & sluggish economy as well as prospect of interest rate hike by US Fed.
EXCHANGE RATES & CURRENCIES
Asian currencies set for worst quarter in 17 years
30/09/2015
Adapted from Bloomberg News agency article
Asian currencies are headed for their biggest quarterly loss since the Asian financial crisis in 1997, having been battered by China's recent surprise devaluation of China's currency, known as the Yuan, together with the sluggish Chinese economy and exports, as well as the prospect of an interest rate increase by the US central bank, the Fed, in the near future.
The Yuan fell the most in 1 1/2 years as an economic downturn worsened in China.
Malaysia's currency, the Ringgit, was affected the most with a 15% slide as oil prices retreated and Prime Minister Najib Razak was caught up in a corruption investigation.
Thailand's baht dropped 7.1%, its worst performance since 1999.
[The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies outside of Japan, has dropped 4.2% in its worst performance since the 1997-98 crisis. Indonesia's rupiah weakened 9.1% against the dollar this quarter. Taiwan's dollar fell 6%, the biggest loss since 1997, and South Korea's won retreated 6.4%. The yuan declined 2.4%, the most since the three months ended March 2014. The Singapore dollar retreated 5.6% this quarter, the Philippine peso weakened 3.8% and India's rupee dropped 3.5%. Vietnam's dong retreated 2.9%, its worst performance since 2011, as authorities devalued the currency for the third time this year following China's weakening of the yuan.]
Experts say continued losses of Asian currencies against the US dollar are likely in the fourth quarter of this year.
Currency volatility will likely remain elevated as debate and uncertainty over the Fed policy outlook continues in the coming weeks and months. Federal Reserve Chair Janet Yellen said Thursday the US central bank remains likely to boost interest rates this year.
Capital flight as a result of the US Fed boosting interest rates, is also a worry. Foreign investment funds pulled a net $17.8 billion this quarter from stock markets in India, Indonesia, Philippines, South Korea, Taiwan and Thailand.
An estimated $141.66 billion of capital left China in August after the Yuan's surprise devaluation rattled global markets, exceeding the previous record of $124.62 billion in July.
CHINA'S SLOWDOWN
Asian policymakers are struggling with a regional deceleration in growth.
China's economy, the world's second-largest, is expanding at the slowest pace since 1990 and a gauge of China's manufacturing sector sank to a six-year low this month.
China's slowdown is hurting Asian exports. The supply chains of Asian economies are intertwined and depend on each other with parts and raw materials for finished goods, such as cars or electronics goods, often coming from different countries. The slowdown in exports has bolstered the case for monetary easing and heightened the risk of a currency war.
Exports from Thailand, South Korea and Taiwan have all fallen for the last seven to eight months. Indonesia's shipments contracted for the 11th month in a row.
ASIA'S ECONOMIC FUNDAMENTALS STILL STRONG
The fundamentals for Asia as a whole are arguably better than they were back in 1997.
The slide in currencies is occurring amid lower external debt burdens, more flexible exchange rates and higher foreign currency reserves than during the late 1990s crisis. Most Asian economies now run current account surpluses instead of deficits.
China wasn't a big factor back in 1997 like it is now. Concerns about China's growth, currency and policy are likely going to weigh heavily on Asian currencies for some time.
http://www.bangkokpost.com/news/asia/712996/asian-currencies-set-for-worst-quarter-in-17-years
sian currencies headed for biggest quarterly loss since 1997 crisis, battered by China's devaluation & sluggish economy as well as prospect of interest rate hike by US Fed.EXCHANGE RATES & CURRENCIESAsian currencies set for worst quarter in 17 years30/09/2015 Adapted from Bloomberg News agency article Asian currencies are headed for their biggest quarterly loss since the Asian financial crisis in 1997, having been battered by China's recent surprise devaluation of China's currency, known as the Yuan, together with the sluggish Chinese economy and exports, as well as the prospect of an interest rate increase by the US central bank, the Fed, in the near future. The Yuan fell the most in 1 1/2 years as an economic downturn worsened in China. Malaysia's currency, the Ringgit, was affected the most with a 15% slide as oil prices retreated and Prime Minister Najib Razak was caught up in a corruption investigation.Thailand's baht dropped 7.1%, its worst performance since 1999. [The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies outside of Japan, has dropped 4.2% in its worst performance since the 1997-98 crisis. Indonesia's rupiah weakened 9.1% against the dollar this quarter. Taiwan's dollar fell 6%, the biggest loss since 1997, and South Korea's won retreated 6.4%. The yuan declined 2.4%, the most since the three months ended March 2014. The Singapore dollar retreated 5.6% this quarter, the Philippine peso weakened 3.8% and India's rupee dropped 3.5%. Vietnam's dong retreated 2.9%, its worst performance since 2011, as authorities devalued the currency for the third time this year following China's weakening of the yuan.] Experts say continued losses of Asian currencies against the US dollar are likely in the fourth quarter of this year. Currency volatility will likely remain elevated as debate and uncertainty over the Fed policy outlook continues in the coming weeks and months. Federal Reserve Chair Janet Yellen said Thursday the US central bank remains likely to boost interest rates this year. Capital flight as a result of the US Fed boosting interest rates, is also a worry. Foreign investment funds pulled a net $17.8 billion this quarter from stock markets in India, Indonesia, Philippines, South Korea, Taiwan and Thailand. An estimated $141.66 billion of capital left China in August after the Yuan's surprise devaluation rattled global markets, exceeding the previous record of $124.62 billion in July. CHINA'S SLOWDOWN Asian policymakers are struggling with a regional deceleration in growth. China's economy, the world's second-largest, is expanding at the slowest pace since 1990 and a gauge of China's manufacturing sector sank to a six-year low this month. China's slowdown is hurting Asian exports. The supply chains of Asian economies are intertwined and depend on each other with parts and raw materials for finished goods, such as cars or electronics goods, often coming from different countries. The slowdown in exports has bolstered the case for monetary easing and heightened the risk of a currency war. Exports from Thailand, South Korea and Taiwan have all fallen for the last seven to eight months. Indonesia's shipments contracted for the 11th month in a row.ASIA'S ECONOMIC FUNDAMENTALS STILL STRONG The fundamentals for Asia as a whole are arguably better than they were back in 1997. The slide in currencies is occurring amid lower external debt burdens, more flexible exchange rates and higher foreign currency reserves than during the late 1990s crisis. Most Asian economies now run current account surpluses instead of deficits. China wasn't a big factor back in 1997 like it is now. Concerns about China's growth, currency and policy are likely going to weigh heavily on Asian currencies for some time. http://www.bangkokpost.com/news/asia/712996/asian-currencies-set-for-worst-quarter-in-17-years
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