Most emerging Asian currencies slid on Tuesday as oil prices resumed their decline, boosting worries about a slowing global economy and investors' aversion to riskier assets. South Korea's won led losses among regional currencies after data showed economic growth slowed by more than half in the fourth quarter of 2015 from the previous three months.
The Philippine peso fell to its lowest in more than 6 years as local shares lost 1.3 percent, underperforming peers in Southeast Asia. The Singapore dollar edged down after the city-state's factory output in December suffered the largest slump in eight months due to weakness in marine and offshore engineering as well as electronics sectors.
Crude futures extended falls to retest $30 a barrel on fresh concerns over a supply glut from top producer Saudi Arabia and Iraq. Asian stocks also took a hit. "Falling oil prices and declines in equity markets signal still weak sentiment towards risk assets," said Khoon Goh, senior FX strategist for ANZ in Singapore. "The risk of lower inflation (due to lower oil prices) provides scope for some central banks to ease policy, which in turn will weaken their currency," Goh said, adding Singapore, South Korea and Taiwan are facing such a risk.
On Monday, Singapore's central bank and government said there is significant uncertainty over the outlook global oil prices and they would continue to keep a close watch the crude's impact on inflation. Investors are awaiting monetary policy decisions from the US Federal Reserve and the Bank of Japan later this week. Emerging Asian currencies may see some support if they take a dovish stance, but the impact is unlikely to last long, given sustained concerns over a global economic slowdown, traders and analysts said. The won slid as offshore funds sold it with continuous foreign selling of Seoul shares.
Foreign investors were set to become net sellers for a 14th straight session in South Korea's main stock exchange, unloading nearly a combined net 3.0 trillion won ($2.5 billion) in equities during the period, the Korea Exchange data showed. Local exporters bought the won for month-end settlements when the currency was weaker than 1,200 per dollar, traders said. The peso eased 0.3 percent to 48.00 per dollar, its weakest since September 2009.
Interbank speculators dumped the Philippine currency on weaker local equity markets, traders said. The peso may weaken to 48.35, the 50 percent Fibonacci retracement of its appreciation from 2004 to 2008 as it cleared a chart support at 47.90, analysts said. Malaysia's ringgit rose on catch-up plays after the local markets were closed on Monday, when its regional peers rose.
The Malaysian currency also found support from demand against its neighbouring Singapore dollar. Currency traders almost ignored Malaysian attorney-general's announcement that $681 million transferred into Prime Minister Najib Razak's personal bank account was a gift from the royal family in Saudi Arabia and there were no criminal offences or corruption involved.
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