Asian currencies fell yesterday, highlighting the pressure wrought by a stronger US dollar as the US Federal Reserve races ahead with interest rate hikes.
The New Taiwan dollar declined against the US dollar, dropping NT$0.075 to close at NT$29.790 — an almost one-month low.
The Indian rupee declined to a record low of 78.29 rupees per US dollar, while the Philippine peso dropped as much as 0.7 percent to 54.635 pesos, its weakest level since November 2005.
Photo: Reuters
The South Korean won slid to a 13-year low of 1,297.85 won versus the greenback.
In Hong Kong, the monetary authority has bought HK$78.1 billion (US$10 billion) of the local dollar so far this month, including its HK$20.8 billion purchase on Tuesday. The currency still continues to linger near the weak end of its HK$7.75 to HK$7.85 trading band against the greenback.
Regional currencies have been caught out by the Fed’s hawkish bias, which stands in contrast to the more patient policy stance adopted by Asian central banks. Idiosyncratic factors such as a widening current-account deficit for the Philippines and geopolitical risks for South Korea are adding to the pressure.
“Central bank rate signals are becoming a bigger driver of Asian currencies,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. “Downward pressure on currencies where central banks are behind the curve in managing inflation will increase, particularly as the Fed keeps hiking aggressively.”
Fed Chairman Jerome Powell was scheduled to deliver his semi-annual testimony on monetary policy to the US Congress yesterday and today.
He has said that another 75 or 50 basis-point hike was likely at the next review next month.
It is not just developing Asian currencies that are feeling the heat. The Japanese yen yesterday tumbled to a fresh 24-year low of ￥136.71 per US dollar, as the Bank of Japan’s ultra-loose policy contrasts with the Fed’s hawkish bias.
“Ongoing global growth concerns, inflation worries and fears of tighter financial conditions continue to keep a leash on risk appetite,” Malayan Banking Bhd FX strategist Christopher Wong (黃經隆) said. “Those Asian ex-Japan central banks perceived to be behind the curve could further be marginalized, for instance TWD [NT dollar] and THB [Thai baht].”
Incoming Bangko Sentral ng Pilipinas governor Felipe Medalla yesterday said that the Philippine monetary authority is unlikely to raise its key rate by more than 25 basis points today.
“Most likely not,” Medalla said in a mobile phone message, when asked if a bigger rate increase is needed due to the peso’s drop.
“Of course I don’t know for sure how MBMs will vote,” he added, referring to Monetary Board members.
Jonathan Ravelas, chief market strategist at BDO Unibank Inc in Manila, said the peso might fall to a fresh record low if the Philippines opts for gradual rate hikes while the Fed tightens aggressively.
Some other policymakers are more inclined to wait. Indonesia’s central bank does not need to rush to raise interest rates unless it sees fundamental inflationary pressures, Governor Perry Warjiyo said.
Similarly, Thailand has refrained from raising borrowing costs and opted instead to cap prices of essential goods to contain inflation.
Additional reporting by staff writer
PROTECTION: The investigation, which takes aim at exporters such as Canada, Germany and Brazil, came days after Trump unveiled tariff hikes on steel and aluminum products US President Donald Trump on Saturday ordered a probe into potential tariffs on lumber imports — a move threatening to stoke trade tensions — while also pushing for a domestic supply boost. Trump signed an executive order instructing US Secretary of Commerce Howard Lutnick to begin an investigation “to determine the effects on the national security of imports of timber, lumber and their derivative products.” The study might result in new tariffs being imposed, which would pile on top of existing levies. The investigation takes aim at exporters like Canada, Germany and Brazil, with White House officials earlier accusing these economies of
EARLY TALKS: Measures under consideration include convincing allies to match US curbs, further restricting exports of AI chips or GPUs, and blocking Chinese investments US President Donald Trump’s administration is sketching out tougher versions of US semiconductor curbs and pressuring key allies to escalate their restrictions on China’s chip industry, an early indication the new US president plans to expand efforts that began under former US president Joe Biden to limit Beijing’s technological prowess. Trump officials recently met with their Japanese and Dutch counterparts about restricting Tokyo Electron Ltd and ASML Holding NV engineers from maintaining semiconductor gear in China, people familiar with the matter said. The aim, which was also a priority for Biden, is to see key allies match China curbs the US
Teleperformance SE, the largest call-center operator in the world, is rolling out an artificial intelligence (AI) system that softens English-speaking Indian workers’ accents in real time in a move the company claims would make them more understandable. The technology, called accent translation, coupled with background noise cancelation, is being deployed in call centers in India, where workers provide customer support to some of Teleperformance’s international clients. The company provides outsourced customer support and content moderation to global companies including Apple Inc, ByteDance Ltd’s (字節跳動) TikTok and Samsung Electronics Co Ltd. “When you have an Indian agent on the line, sometimes it’s hard
‘SACRED MOUNTAIN’: The chipmaker can form joint ventures abroad, except in China, but like other firms, it needs government approval for large investments Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) needs government permission for any overseas joint ventures (JVs), but there are no restrictions on making the most advanced chips overseas other than for China, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. US media have said that TSMC, the world’s largest contract chipmaker and a major supplier to companies such as Apple Inc and Nvidia Corp, has been in talks for a stake in Intel Corp. Neither company has confirmed the talks, but US President Donald Trump has accused Taiwan of taking away the US’ semiconductor business and said he wants the industry back
RSS