Asian forex: Indian rupee, Indonesian rupiah hit milestone lows

Most Asian currencies edged down on Thursday, as a trade dispute between the world's two largest economies continued to keep investors on edge due to its potential spillover effect. "Asian currencies are influenced by what happens to the renminbi and since the escalation of the trade tensions in the last week or two, we've really seen a large weakening in the renminbi and that has been the major driver of Asian currencies," said Khoon Goh, ANZ's head of Asia research.
"A lot of it really boils down to whether or not we are going to see any easing in these trade tensions...I think for now sentiment remains weak, we will continue to see further outflows both from the equity and bond markets in Asia and really that is going to be the main driver for further weakness in Asian asset prices."
Among regional currencies on Thursday, the Chinese yuan touched its weakest against the dollar since mid-December, 2017, losing 0.23 percent.
The People's Bank of China, the country's central bank, loosened the yuan's official midpoint for a seventh straight session.
The loosening of the PBOC's daily guidance rate was in line with Wednesday's, which was the biggest since January, 2017.
Export-dependent currencies such as South Korea's won and Taiwan's dollar lost 0.32 percent and 0.27 percent, respectively. A significant amount of the countries' exports are to China, leaving them exposed to a potential trade war-linked slowing of growth in the world's second-largest economy.
The Thai baht matched the direction of the rest of the region to weaken 0.18 percent. Data on Wednesday showed Thailand's manufacturing production index in May rose 3.2 percent from a year earlier, below the 3.5 percent rise forecast by a Reuters poll.
The Philippine peso bucked the regional trend to gain about 0.07 percent.
Indonesia's rupiah slumped as much as 0.83 percent to touch its weakest since October 6, 2015. Its slide on Thursday cemented the rupiah's place as the region's third-worst performer in the year to date, down about 5 percent.
ANZ's Goh said the rupiah had been "a victim of previous success" to some extent, as there were strong inflows into Indonesia throughout 2017 and over the early part of 2018.
Foreign investors had gone overweight on Indonesian assets and the market was now seeing a change in that allocation of portfolio positioning.
The central bank, which raised its key interest rate twice in May, was likely to hike it again at a policy meeting on Friday, a Reuters poll showed.
The Indian rupee's 0.45 percent loss set it on track for a fourth straight losing session. The currency hit an all-time low of 69.09 to the dollar during the session.
Inflation and fiscal concerns have weighed on the rupee with oil accounting for a major share of India's current account deficit.
The concerns have led to outflows, with foreign institutional investors exiting equity derivative positions worth 10.75 billion rupees ($156.01 million) on Wednesday, the National Stock Exchange's data showed. The rupee has slid 7.32 percent in the year to date.