Asian currencies: Yen at six-week high

BENGALURU: Technology-heavy stock indexes of South Korea and Taiwan fell sharply on Thursday, after reports that the United States was mulling tighter curbs on exports of advanced semiconductor technology to China triggered a sell-off in chip stocks.

Currencies in emerging Asian markets were largely mixed. The Indonesian rupiah fell 0.4%, giving up most of its gain made on Wednesday when the central bank left its interest rate unchanged.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell as much as 1% in its fourth straight session of declines. Shares in South Korea weakened as much as 1.5% to hit their lowest in more than two weeks.

Equities in Taiwan fell 2.6% to post their biggest intraday drop since mid-April, with chip-making giant TSMC shedding over 4%.

“There are huge risks of increased tariffs on China and the China region, and now on the chip sector,” said Jessica Amir, a markets strategist, at investment and trading platform Moomoo.

“This means the chip sector could succumb to even more profit-taking, remembering investors are rotating out of mega-cap tech, clipping profits off the table and going into small caps anyway given the Fed is now likely to cut rates two-three times this year.”

Elsewhere, Indonesian shares jumped 1.2% to mark their biggest intraday gain since late June, boosted by utilities and banks, while Philippine and Singapore stocks edged lower.

Among currencies, the South Korean won and Taiwan’s dollar edged higher. The Thai baht and Malaysian ringgit edged lower, while the Singapore dollar was largely flat.

In Japan, the Nikkei fell 2% amid a global sell-off in chip stocks, while the yen scaled a six-week high against the dollar with data suggesting authorities might have bought nearly 6 trillion yen last week.

“A violent move downwards is not unexpected in such a scenario given how stretch short JPY positions are,” analysts at Maybank wrote.

“Fundamentally, yield differentials are still wide and therefore, we expect the USDJPY to eventually rebound upwards again further into 3Q 2024.