 "Rupee plunges with Asian currencies on Fed tapering concerns")
The Indian rupee and Indonesia's rupiah led a weekly loss in Asian currencies on increasing speculation the US will scale back monetary stimulus as the world's biggest economy improves.
Indonesia's currency slumped to the weakest level since 2009 and the rupee dropped to a record amid concern about widening current-account deficits. India has seen its foreign- exchange reserves sink as much as seven per cent this year to $277 billion, while Indonesia's holdings shrank 18 per cent to $92.7 billion.
"Central banks are being tested, especially those in Indonesia and India," said Andy Ji, a foreign-exchange strategist at Commonwealth Bank of Australia in Singapore. "People just don't have the confidence that they have enough reserves to shore up their currencies."
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, lost 0.5 per cent during the week to 115.35 in Singapore. The rupee fell 1.3 per cent to 61.66 per dollar and reached an unprecedented 62.005 yesterday. The rupiah dropped 0.96 per cent to 10,385 and touched 10,435, the lowest since June 2009.
The Federal Reserve will reduce its $85 billion of monthly bond purchases in September, according to 65 per cent of economists surveyed by Bloomberg. The program has boosted the supply of dollars and driven demand for emerging-market assets. Initial jobless claims in the US fell to the least in almost six years, official data showed this week.
India measures
The Reserve Bank of India increased efforts this week to stem the rupee's plunge by cutting the amount local companies can invest overseas without seeking approval to 100 per cent of their net worth, from 400 per cent. The central bank has also tightened cash supply, restricted currency derivatives and curbed gold imports.
The rupee depreciated 11 per cent this year, the second- worst performance among 12 of Asia's most-traded currencies. The current-account deficit was an unprecedented 4.8 per cent of gross domestic product in the 12 months through March. The government aims to narrow that to 3.7 per cent this year, Indian Finance Minister Palaniappan Chidambaram told Parliament in New Delhi on August 14.
Indonesia's central bank reported yesterday that the second-quarter current account deficit widened to a record $9.85 billion, from $5.82 billion in the first three months of the year. Policy makers held the benchmark reference rate at 6.5 per cent this week, as predicted by 16 of 25 analysts surveyed by Bloomberg.
"Bank Indonesia has become more tolerant to the rupiah trading lower," said Gundy Cahyadi, an economist at Overseas- Chinese Banking Corp in Singapore. "The main problem is the current-account position, which increasingly looks like it will stay for a while and isn't easily solved by monetary policy alone."
Malaysia's ringgit slid 0.7 per cent to 3.2770 per dollar this week and reached a three-year low of 3.2838 yesterday after Moody's Investors Service said this week that the nation's sovereign rating could come under pressure due to the government's weakening fiscal position.
Bond ownership
The country's current account is forecast to have swung to a deficit of 1 billion ringgit ($305 million) in the second quarter, from a surplus of 8.7 billion ringgit in the prior three months, according to the median estimate in a Bloomberg News survey before government data due on August 21.
"Balance of payments and current-account deficit or surpluses, alongside foreign ownership of local bonds are a key focus as we approach a period where liquidity will be removed from the market by the US," London-based Martyn Harrison, a currency options sales trader at Marex Spectron, wrote in a research report yesterday. "It is clear Indonesia alongside India and Malaysia have these problems in abundance."
Elsewhere in Asia, the Philippine peso dropped 0.3 per cent to 43.63 a dollar this week and South Korea's won lost 0.1 per cent to 1,113.59. Thailand's baht fell 0.1 per cent to 31.27. China's yuan rose 0.2 per cent to 6.1130 and reached a 19-year high of 6.1090 yesterday. Taiwan's dollar declined 0.2 per cent to NT$30.002.
Indonesia's currency slumped to the weakest level since 2009 and the rupee dropped to a record amid concern about widening current-account deficits. India has seen its foreign- exchange reserves sink as much as seven per cent this year to $277 billion, while Indonesia's holdings shrank 18 per cent to $92.7 billion.
"Central banks are being tested, especially those in Indonesia and India," said Andy Ji, a foreign-exchange strategist at Commonwealth Bank of Australia in Singapore. "People just don't have the confidence that they have enough reserves to shore up their currencies."
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, lost 0.5 per cent during the week to 115.35 in Singapore. The rupee fell 1.3 per cent to 61.66 per dollar and reached an unprecedented 62.005 yesterday. The rupiah dropped 0.96 per cent to 10,385 and touched 10,435, the lowest since June 2009.
The Federal Reserve will reduce its $85 billion of monthly bond purchases in September, according to 65 per cent of economists surveyed by Bloomberg. The program has boosted the supply of dollars and driven demand for emerging-market assets. Initial jobless claims in the US fell to the least in almost six years, official data showed this week.
India measures
The Reserve Bank of India increased efforts this week to stem the rupee's plunge by cutting the amount local companies can invest overseas without seeking approval to 100 per cent of their net worth, from 400 per cent. The central bank has also tightened cash supply, restricted currency derivatives and curbed gold imports.
The rupee depreciated 11 per cent this year, the second- worst performance among 12 of Asia's most-traded currencies. The current-account deficit was an unprecedented 4.8 per cent of gross domestic product in the 12 months through March. The government aims to narrow that to 3.7 per cent this year, Indian Finance Minister Palaniappan Chidambaram told Parliament in New Delhi on August 14.
Indonesia's central bank reported yesterday that the second-quarter current account deficit widened to a record $9.85 billion, from $5.82 billion in the first three months of the year. Policy makers held the benchmark reference rate at 6.5 per cent this week, as predicted by 16 of 25 analysts surveyed by Bloomberg.
"Bank Indonesia has become more tolerant to the rupiah trading lower," said Gundy Cahyadi, an economist at Overseas- Chinese Banking Corp in Singapore. "The main problem is the current-account position, which increasingly looks like it will stay for a while and isn't easily solved by monetary policy alone."
Malaysia's ringgit slid 0.7 per cent to 3.2770 per dollar this week and reached a three-year low of 3.2838 yesterday after Moody's Investors Service said this week that the nation's sovereign rating could come under pressure due to the government's weakening fiscal position.
Bond ownership
The country's current account is forecast to have swung to a deficit of 1 billion ringgit ($305 million) in the second quarter, from a surplus of 8.7 billion ringgit in the prior three months, according to the median estimate in a Bloomberg News survey before government data due on August 21.
"Balance of payments and current-account deficit or surpluses, alongside foreign ownership of local bonds are a key focus as we approach a period where liquidity will be removed from the market by the US," London-based Martyn Harrison, a currency options sales trader at Marex Spectron, wrote in a research report yesterday. "It is clear Indonesia alongside India and Malaysia have these problems in abundance."
Elsewhere in Asia, the Philippine peso dropped 0.3 per cent to 43.63 a dollar this week and South Korea's won lost 0.1 per cent to 1,113.59. Thailand's baht fell 0.1 per cent to 31.27. China's yuan rose 0.2 per cent to 6.1130 and reached a 19-year high of 6.1090 yesterday. Taiwan's dollar declined 0.2 per cent to NT$30.002.