SINGAPORE: Emerging Asian currencies slid on Wednesday as expectations of US interest rate hikes increased on solid economic data and top Federal Reserve officials' support for more tightening.
The Chinese yuan slid to hover near a two-month low as local companies rushed to buy the dollar.
South Korea's won slumped to a two-month trough as offshore funds sold it on broad strength in the dollar .
The Thai baht hit a 2-1/2-month low, as traders suspected that the country's conglomerate Central Group was accumulating foreign currency for its 1 billion euro ($1.1 billion) deal with France's Casino. The French retailer is to sell its Vietnam business to Central.
US consumer prices recorded their biggest increase in more than three years in April, giving the Fed reasons to raise borrowing costs later this year. Housing starts and industrial production also strongly rebound.
Atlanta Fed President Dennis Lockhart said on Tuesday he still assumes there will be two to three rate increases between now and December, and San Francisco Fed President John Williams agreed. Dallas Fed President Robert Kaplan said he will advocate a rate hike at the Fed's coming policy meetings.
"We opened the door for a June hike. But markets had not been pricing in possibilities of a June hike much," said Jeong My-young, Samsung Futures research head in Seoul. "If the odds increase, the dollar will rise and Asia FX fall."
"If not in June, we see one to two hikes in the second half as US inflation is seen accelerating, although we need to see Yellen's stance," Jeong added, referring to Fed Chair Janet Yellen.
US interest rate futures posted large declines with the December 2016 contract falling the most in 2-1/2-half months to price in a 70-80 percent chance of a rate hike by then, with a 50 percent chance of a move priced in by September.
Investors were awaiting the minutes of the Fed's meeting last month, due later in the day, for clues on future monetary policies.
WON
The won lost 0.8 percent to 1,183.0 per dollar, its weakest since March 16, tracking the currency's weakness in non-deliverable forwards.
Exporter's demand for settlements - a usual supporting factor for the won - was not strong enough to offset selling pressure from offshore funds, traders said.
The South Korean currency has an immediate chart support at 1,183.5, a 100-day moving average. It has been stronger than the average since March 17.
Once the support level is cleared, the unit may weaken to 1,186.8, the 50 percent Fibonacci retracement of its appreciation from February to April, analysts said.
BAHT
The baht slumped 0.3 percent to 35.62 per dollar, its weakest since March 2, as bond outflows added to pressure from suspected corporate foreign currency demand.
Thai government bond prices slid with the 5-year debt yield at 1.67 percent, the highest since Feb. 25.
Foreign investors were net sellers in the local bond market during the previous four sessions, according to the Thai Bond Market Association.
The baht found a chart support at 35.63, a 200-day moving average. The unit has been firmer than the average since early March.
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