Asian currencies fell this week, led by the South Korean won and Indian rupee, as emerging markets took a beating after Dubai sought to delay debt payments, bolstering demand for safety in US Treasuries and the US dollar.
The MSCI Asia-Pacific Index of local shares slumped to the lowest level in almost eight weeks. The greenback rose against 15 of 16 major currencies on Friday after state-owned Dubai World, with US$59 billion of liabilities, requested a “standstill” agreement from creditors. The Philippine peso dropped after data on Thursday showed third-quarter growth fell short of analysts’ estimates.
“Dubai prompted a wave of risk aversion globally,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Calyon, the investment-banking unit of France’s Credit Agricole SA. “We see Asian currencies a bit vulnerable in this environment. It’s not going to be a huge fallout because Asia looks more solid in terms of fundamentals.”
The won on Friday dropped 1.7 percent to 1,175.35 per US dollar and was down 1.4 percent on the week, the biggest loss in five, according to data compiled by Bloomberg. India’s rupee declined 0.4 percent to 46.6387 and fell 0.01 percent from Nov. 20. Markets in Indonesia, Singapore and Malaysia were closed on Friday.
South Korea’s financial companies were owed a combined US$32 million from Dubai World and its property unit Nakheel PJSC as of the end of September, the MoneyToday newspaper reported, citing the nation’s financial regulator.
The New Taiwan dollar dropped 0.3 percent this week to NT$32.345.
The Philippine peso declined 0.8 percent in Manila on Friday to 47.205 and lost 0.3 percent for the week.
Thailand’s baht was down 0.1 percent from the end of last week at 33.26 per dollar. The Malaysian ringgit declined 0.2 percent to 3.3910 and Indonesia’s rupiah fell 0.7 percent to 9,535 from a week ago. The Singapore dollar dropped 0.1 percent to S$1.3897.
The US dollar dropped to the lowest level versus the yen since July 1995 and fell against the euro as the Federal Reserve’s signal that it would tolerate a weaker greenback encouraged investors to buy higher-yielding assets outside the US.
The US currency touched as low as ¥84.83 on Friday, the weakest in 14 years, spurring speculation Japan would intervene to curtail gains in its currency. For the week, the greenback fell 2.6 percent to ¥86.57, the fifth consecutive weekly decline.
The greenback declined 0.7 percent to US$1.4962 per euro from US$1.4862 last Friday. The yen rose 2 percent to ¥129.41 per euro, from ¥132.09. The US currency fell 2.8 percent to ¥86.49, from ¥88.88.
The US dollar has depreciated 7 percent against the euro, 4.5 percent against the yen and 13 percent versus the pound this year.
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