The Indonesian rupiah hit a fresh 17-year low versus the dollar on Friday and most emerging Asian currencies were on track for weekly losses, dented by a rise in US bond yields. The rupiah slipped to as low as 13,295 versus the dollar, its weakest level since August 1998, according to Thomson Reuters data.
Its drop this week seems to be more a reflection of dollar buying by onshore players rather than moves by overseas investors to pull money out of Indonesian assets, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. "The move is led by domestic players. There is no question that their demand for dollars is strong," Okagawa said.
The rupiah is the worst-performing Asian currency so far this year, dented by concerns over Indonesia's economic slowdown and its chronic current account deficit. The rupiah eased on a mixed day for Asian currencies. While the Philippine peso hit a five-month low of 45.00 versus the dollar and the Malaysian ringgit set a seven-week low, the South Korean won and Indian rupee held firm.
Most Asian currencies were on track for weekly losses, pressured by a rise in US bond yields, which can reduce the attractiveness of the higher yields available in emerging Asia. The US 10-year Treasury yield hit an eight-month high of 2.425 percent on Thursday. It has since backed off that high but was still up around 24 basis points for the week at 2.332 percent.
Besides the move higher in US yields, Asian currencies have also been hit by disappointing economic data, said Khoon Goh, senior FX strategist for ANZ in Singapore. "Export performance continues to disappoint pretty much across the board," Goh said.
The ringgit fell to as low as 3.7160 versus the dollar, its lowest level since April 15. The ringgit also fell to its lowest level against the Singapore dollar on Thomson Reuters data going back to 1990, with the Singapore dollar hitting a high of 2.7560 versus the ringgit. Analysts said persistent concerns over loss-making state investment fund 1MDB were weighing on the ringgit. Malaysia's central bank had said on Wednesday that it has launched a formal enquiry into 1MDB, and issued a legal directive for information, to examine whether there had been any violation of its rules.
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