Grim economic news from around the world sent the US dollar mostly higher on Friday while the yen regained favor as a safe haven investment, analysts said.
Jittery traders rushed into the greenback and yen after news of a dismal 6.2 percent annualized fourth-quarter contraction in the US economy and more troubling economic data from Europe.
The euro fell to US$1.2671 at 10pm GMT from US$1.2743 late on Thursday. The dollar dipped to ¥97.65 from ¥98.46 on Thursday.
The market action came after news of a sharper-than-expected 6.2 percent contraction in the US economy in the fourth quarter, highlighting the stunning meltdown in activity late last year.
In late New York trading, the dollar stood at 1.1701 Swiss francs after SF1.1644 on Thursday.
The pound was at US$1.4310 after US$1.4322.
Asian currencies fell this month, with South Korea’s won tumbling to an 11-year low and the Indian rupee dropping to a record, on concern sliding exports and shrinking economies will deter investment.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slumped to a four-year low on Friday as global funds favored safer bets than emerging-market assets. Government reports this week showed India’s economy expanded at the slowest pace since 2003, Singapore’s had the biggest quarterly contraction in at least 33 years, and Hong Kong’s exports fell the most in half a century.
The won fell 1.1 percent to 1,534 against the US dollar on Friday, according to Seoul Money Brokerage Services Ltd. It reached 1,544, the weakest since March 1998. India’s rupee declined 1.3 percent to 51.15, extending its loss this month to 4.4 percent.
Eight of the 10 most-active Asian currencies dropped against the dollar this month. China’s yuan and the Hong Kong dollar, which is pegged to the greenback, were little changed.
The MSCI Asia-Pacific Index of regional shares slid 7.4 percent this month, taking its loss for the year to 16 percent. The benchmark plunged 43 percent in 2008.
India’s economy, Asia’s third-largest, expanded 5.3 percent from a year earlier in the last quarter, the government said on Friday. Singapore’s gross domestic product declined an annualized 16 percent during the three-month period and Hong Kong’s exports in January tumbled 22 percent, separate reports showed.
The New Taiwan dollar dropped as low as NT$35.008 on Friday, the weakest since April 2003, according to Taipei Forex Inc. The NT dollar closed 0.3 percent lower versus the greenback at NT$34.95 on Friday, capping a 3.3 percent drop for the month.
Indonesia’s rupiah dropped 4.5 percent this month to 11,980 to the dollar, according to data compiled by Bloomberg. The rupiah had a seventh weekly decline, the longest losing streak since November 2007.
Malaysia’s ringgit declined 2.6 percent this month and reached 3.7065 per dollar on Friday, the lowest since March 2006.
Thailand’s baht sank to a two-year low of 36.18 per dollar on Friday, having lost 3.3 percent this month. The Philippine peso slid 2.9 percent to 48.798. China’s yuan was little changed for the month at 6.8398.
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
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