Won extends fall to near one-week low
THE South Korean won eased to a near one-week low on Monday, while China’s yuan took a breather from having racked up its biggest weekly drop in over a year last week on the increasing likelihood of a long-drawn Sino-US trade war.
Trading in other currencies was subdued due to some regional financial markets being shut for holidays.
The won, the worst-performing regional currency so far this year with more than an 8% fall, eased as much as 0.5% and extended its fall on Friday. The currency is set for a fifth session of losses in seven trading days in August.
Already reeling under strain due to the impact of the Sino-US trade spat on South Korea’s heavily export-oriented economy, the won is also under pressure from rising tensions on the Korean peninsula.
North Korea fired two short-range missiles on Saturday, its fifth within two weeks, in what South Korea called a show of force against joint new military drills with the United States.
Currencies in Asia have been dampened lately by several regional central banks easing policy to support growth, while there has also been no resolution between the United States and China on their protracted trade war, hurting the outlook on global growth.
The Indonesian rupiah weakened as much as 0.3% to 14,220.00 against the dollar.
Data on Friday showed Indonesia’s current account deficit widened in the second quarter, sending the country’s overall balance of payments into deficit.
Analysts at Maybank said in a note that going forward, the current account deficit would improve due to lower oil prices and a stable currency.
“Foreign direct investment will likely rise significantly due to political stability, more business-friendly regulation, robust domestic demand and a low interest rate environment,” Maybank analysts said.
The yuan eased slightly but losses were capped as authorities sent signals to stabilize the yuan through the central bank’s daily official guidance rate.
The Chinese currency fell 1.7% against the greenback last week as Beijing let the yuan fall past the key 7 per dollar level for the first time since the global financial crisis. The decline followed the United States’ threat to slap a 10% tariff on $300 billion of Chinese goods.
The Singapore dollar and the Taiwan dollar were little changed.
The Thai, Indian and Malaysian markets were closed for a holiday.
Meanwhile, among global emerging market currencies, the focus will be on the Argentine peso as early official results showed the Latin American country’s voters soundly rejected President Mauricio Macri’s austere economic policies in primary elections on Sunday, casting serious doubt on his chances of re-election in October. — Reuters
