Southeast Asian Currencies Tumble


Southeast Asian currencies tumbled again on Thursday, with several falling to multi-year lows as investors flee riskier emerging-market assets.

The Philippine peso, Singapore dollar and Thai baht all hit new long-term lows, while the Indonesian rupiah touched 11,000 against the U.S. dollar for the first time since the aftermath of the global financial crisis.

The declines followed broad gains in the U.S. dollar overnight following the release on Wednesday of minutes from the latest policy meeting of the U.S. Federal Reserve. The minutes didn’t shed any new light on when the Fed might start winding down its monetary stimulus, but that only reinforced the consensus expectation among market participants that it will do so soon, perhaps at its September meeting.

Yields on U.S. Treasury bonds have risen in anticipation of the Fed pulling back on its monetary easing, making many emerging-market assets less appealing to investors.

Slowing growth and, in some cases, worsening trade balances have exacerbated the selloff in Southeast Asian equities and currencies in recent months.

The Indonesia rupiah has lost around 10% since mid-May, as its economy slows, inflation surges and its current-account deficit widens. The rupiah hit a 4-year low on Thursday, briefly crossing 11,000 against the U.S. dollar before strengthening to trade at around 10,755.

The Malaysian ringgit, meanwhile, fell to the lowest level in more than three years, hitting 3.32 against the U.S. dollar. The ringgit is now down 8.6% this year.

The Malaysian central bank on Wednesday cut its full-year growth outlook after reporting that gross domestic product grew at a weaker-than-expected rate of 4.3% in the second quarter from a year earlier, while its current-account surplus narrowed.

The Philippine peso also fell on Thursday, hitting 44.44 against the U.S. dollar, the lowest level since January 2011, before trading at 44.17. It is now down 7.6% this year. The Philippines PSE Composite Index was down 6% midday in the first day of trading this week after flooding and a public holiday closed the market.

The Thai baht, meanwhile, hit a three-year low of 32.17 and has now lost 4.9% this year.

The Singapore dollar, typically a regional anchor, has also fallen. It hit a new low for the year, falling to 1.2860 before trading at around 1.2837. It has now shed 5.1% this year.

Fundamentally, the Singapore dollar is on better footing than its neighboring counterparts, due partly to a relatively low level of bond holdings by foreign investors. But private-sector economists surveyed by the Monetary Authority of Singapore have cut their consensus for the city-state’s full-year economic growth to 2.3% from 2.8%, citing the global slowdown.

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