MOST ASIAN CURRENCIES weakened on Monday as investors braced ahead of a busy week lined with central bank meetings, corporate results and updates on US inflation and payrolls.
Central banks in focus include the Bank of Japan (BoJ), which ends a two-day meeting on Tuesday, and the Federal Reserve, which concludes its policy meeting on Wednesday. The Bank of England also makes a policy decision on Thursday.
Financial markets are waiting to see whether the BoJ will announce tweaks to its massive stimulus program to make it more sustainable.
The dollar index against a basket of six major currencies strengthened slightly to 94.735.
China’s yuan led losses regionally, weakening 0.4% followed by India’s rupee and Malaysia’s ringgit, which weakened 0.2 and 0.1%, respectively.
“Ringgit will continue to struggle amid concerns over trade war impact on China’s economy and upcoming,” said Stephen Innes, head of trading APAC at Oanda.
“Dealers will remain cautious shorting the US dollar ahead of this week’s non-farm payroll (data).”
The Reserve Bank of India (RBI) holds its policy meeting on Wednesday at which it is expected to raise rates, according to a Reuters poll.
The Indian rupee has been the worst performing Asian currency in 2018, however, the RBI has recognized that the factors behind its depreciation, such as a hawkish Fed and rising oil prices, are beyond its control, and chosen to smooth overshoots through timely intervention.
The Korean won edged up slightly and was quoted at 1,114.2 per dollar on the onshore settlement platform, 0.35% firmer than its previous close at 1,118.1.
The Philippine peso strengthened by 0.1% at closing, while Singapore’s dollar weakened 0.1%.
Thai markets were closed for a local holiday.
China’s yuan, which has been under pressure amid escalating trade war tensions fell to a 13-month low against the dollar on Monday.
Prior to market opening, the People’s Bank of China lowered the midpoint rate to 6.8131 per dollar, largely matching market forecasts, 189 pips or 0.28% weaker than the previous fix of 6.7942 last Friday.
Last week, the Chinese currency weakened 0.4% against the dollar, its seventh straight weekly loss.
Indonesia’s rupiah traded flat as investors remained cautious ahead of this week’s central bank’s meetings.
The rupiah has weakened nearly six percent so far this year and Southeast Asia’s largest economy is trying get its exporters to bring home earnings they currently keep offshore to help manage the rupiah from falling further.
Bank Indonesia has done more than any Asian peer to defend its currency but it remains hostage to forces outside its control, including rising US interest rates, higher oil prices and the Washington-Beijing trade conflict.
The finance ministry is also reducing rupiah bond issuance, hoping to meet some financing needs with additional foreign-currency loans from lenders such as the World Bank and the Asia Development Bank.
The Philippine peso, however, strengthened further against the dollar on Monday (read S2/3) on the back of the Bangko Sentral ng Pilipinas’ hawkish stance that signalled further policy tightening on the table at the Aug. 9 meeting of its Monetary Board.
The local currency ended yesterday’s session at P53.22 versus the greenback on Monday, 6.5 centavos stronger than the P53.285-per-dollar finish last Friday.
But it was 6.59% weaker year-to-date. — main report by Reuters

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