Asian currencies: rupiah leads drop on oil surge, US outlook

The Indonesian rupiah led declines in Asian currencies on Friday as surging oil prices dampened the outlook for economic recovery across a region heavily dependent on imported crude. Asian currencies were also weighed down by a rebounding dollar, which gained a third of a percent against the yen as operators bet on strong US jobs numbers later on Friday. The rupiah weakened as much as 0.9 percent to a two-month low of 9,365 per dollar. The baht lost a third of a percent to 38.54 per dollar.
The South Korean won, Taiwan dollar and the Singapore dollar lost about a quarter of a percent. "You have high oil prices and at the same time US non-farm payrolls could surprise on the upside and help the dollar," said Thomas Lam, treasury economist at United Overseas Bank in Singapore.
US crude oil prices surged to a four-month high of $55.20 per barrel on Thursday, close to a record high hit in October of $55.67. Oil was trading at $53.68 in Asia on Friday.
Oil prices have surged 27 percent this year, reigniting concern about inflation and higher interest rates and worries that rising input costs may slow growth.
"The won and the Taiwan dollar are more resilient," Cheung said in a note, referring to signs of a revival in domestic consumer demand in South Korea and recent strong inflows of foreign money into Taiwan's stock market.
Other Asian currencies could be hurt if the US reports strong employment numbers. Analysts expect US non-farm payrolls to show that about 220,000 new jobs were created in February, compared with 146,000 in January.
"If the number comes between 150,000 and 250,000, I don't think the market is going to react significantly," said Lam.
But a number higher than 250,000 could help boost the dollar in the near term, although the record US current account deficit is likely to weigh on the US currency in the longer term, Lam said.
A strong US employment figure could encourage the US Federal Reserve to accelerate rate increases, making dollar assets more attractive to global investors and stifling further Asian currency gains.
Still, Cheung expects the Taiwan dollar to strengthen to 30.5 per dollar in coming weeks because of a pick-up in dollar sales by local exporters while rising business confidence in South Korea could keep pressure on the won to appreciate.
The Taiwan dollar and the won are Asia's best performing currencies so far this year.