Asian currencies hurt by firmer dollar, ringgit takes a spill

Wednesday,   06-Mar-2019   12:10 PM (IST)

Asian currencies weakened across the board on Tuesday following gains by the dollar on better-than-expected U.S. data, with the Malaysian ringgit the biggest loser after central bank comments seen as signalling a dovish tilt. Robust U.S. economic data, on service industries and new home sales, saw the dollar index gain for a fifth straight session overnight and hover around two-week highs. The ringgit slid 0.3 percent to its weakest level in more than two weeks, after investors weighed commentary by Bank Negara Malaysia after its Tuesday policy meeting, where it kept interest rates unchanged as expected. The central bank outlined risks from unresolved trade tensions, heightened uncertainties on the global and domestic fronts and weakness in commodity-related sectors. The Philippine peso was  little changed at 52.250, following a sharp fall on Tuesday after the announcement of February inflation falling back into the central bank's target range sparked speculation of policy easing. On Wednesday, incoming Philippine central bank governor Benjamin Diokno said inflation could fall to 2 percent - the bottom of its target range - as early as the third quarter, supporting the view of many economists that a rate cut could come later this year. Elsewhere, the Thai baht and Indonesia's rupiah both weakened 0.2 percent. Renewed worries over tensions on the Korean Peninsula weighed on the won, which fell 0.3 percent to 1,128.9, with some traders saying tensions forced some yuan investors cover their short positions in the greenback. The yuan, the region's strongest performer this year, slipped 0.1 percent to 6.715 per dollar. Investors have regained some of their lost appetite for a currency that shed nearly 6 percent against the dollar in 2018. The yuan is expected to trade around current levels in the next year, a Reuters poll showed, on the prospect of an end to the trade war with the United States. On Tuesday, a pledge by China's state planner to increase the flexibility of the yuan's exchange rate set off market speculation that a tweak to official wording could mean changes to the country's tightly managed currency regime.