SINGAPORE: Emerging Asian currencies skidded on Thursday as views grew that the Federal Reserve will tighten more aggressively given solid US economic data, adding to pressure from higher Treasury yields and fears over Washington's trade protectionism.
The Chinese yuan hit an 8-1/2-year low after the People's Bank of China set its daily guidance rate at its weakest since June 2008.
Chinese state-owned banks sold dollars as the renminbi weakened toward the psychological 7 per dollar level, traders said.
Foreign exchange authorities in India, Indonesia and the Philippines were also suspected of intervening on Thursday to curb losses in their currencies, traders said.
South Korea's won led regional depreciation on bond outflows and as foreign investors were set to reverse a buying spree in the equity market.
The Malaysian ringgit hit an almost 14-month trough, tracking slides in most government bond prices .
Indonesia's rupiah fell to a near six-month low as foreign investors continued to sell local stocks. Most long-term government bond prices slid.
The Singapore dollar touched a 10-month trough on dollar strength and after the city-state downgraded its forecasts for economic growth and exports for this year after confirmed a third-quarter contraction.
The Philippine peso slumped to levels last seen in November 2008 as foreign investors keep dumping Manila shares .
The US dollar hovered around a 14-year peak against a basket of six major currencies as markets are now pricing in a nearly 100 percent probability of a December Fed rate increase, according to CME FedWatch.
Some investors expect more hikes in 2017 if economic momentum is sustained.
US Treasury yields extended their rise. The two-year yield hit its highest levels since April 2010 on Wednesday as the market continued to bet that the incoming administration of President-elect Donald Trump will increase debt-funded spending and spur higher growth and inflation.
Manufactured capital goods in the world's largest economy rebounded last month on rising demand for machinery and equipment. Consumer sentiment also rose this month with Trump's election viewed as positive for their personal finances and the economy.
"Strong US macro data, surging inflation expectations arising from Trump's pro-growth stance and a more hawkish Fed will hurt EM Asian currencies further, although their weakness is technically seen excessive," said Qi Gao, a FX strategist with Scotiabank in Singapore.
"Any corrections in the USD and interventions will provide chances to buy the USD," Gao said, referring to central banks of emerging Asia's efforts to support their currencies.
Regional currencies have suffered from capital outflows on rising US yields and growing concerns that Trump's protectionist stance on trade will hit Asian exports.
WON
The won fell as South Korea posted a combined 878.1 billion won ($742.2 million) worth of bond outflows in the first 23 days of the month, a preliminary data from a financial regulator showed.
Foreign investors also sold a net 125.4 billion won worth of shares in the local main stock exchange by mid-afternoon to snap a five-day buying streak.
A deepening political scandal has added to bearish sentiment.
Investigators raided the offices of Lotte Group, SK Group and government agencies earlier in the day, officials said, as part of a widening probe into alleged influence-peddling that has engulfed President Park Geun-hye.
The South Korean currency recovered some of earlier losses on expectations of demand from exporters for month-end settlements.
Caution also grew over possible intervention by the foreign exchange authorities to stem its weakness.
RINGGIT
The ringgit lost 0.5 percent to 4.4630 per dollar, its weakest since Sept. 29, 2015, when the Malaysian currency hit a 17-year low.
Short-term foreign investors sold the unit, while hedging-related dollar bids also hurt the currency.
RUPIAH
The rupiah slumped 0.4 percent to 13,540 per dollar, its weakest since June 3.
Foreign investors offloaded 7.6 trillion rupiah's ($561.5 million) worth of Indonesian equities over the previous 11 straight sessions.
Most long-term government bond prices fell with the 10-year yield at 8.082 percent, its highest since March 3.
The central bank was suspected of intervening around the session low, traders said.
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