Most emerging Asian currencies weakened on Thursday after a rout in tech stocks erased all of Wall Street's gains for the year and crushed risk appetites in global markets. Worries were compounded by threats to global growth such as slowing earnings momentum, interest rate hikes, the Sino-US trade war as well as continuing international scrutiny of Saudi Arabia over the murder of a journalist.
"Appetite for risky assets is simply not as good as it was a month ago," said DBS in a note to clients. An index measuring the US currency versus six major peers traded around 0.16 percent lower in Asia at 96.26, but still near levels hit when it had gained 0.5 on Wednesday. South Korea's won lost the most and touched a two-week low, down 0.6 percent. The year's worst regional performer, the Indian rupee, shed 0.2 percent against the dollar.
Taiwan's dollar, Indonesia's rupiah, the Malaysian ringgit and the Thai baht all inched down. Among those, the baht has declined the least against the dollar this year, supported by Thailand's solid fundamentals. On the day, the currency plumbed 2-week lows, down 0.1 percent. The currency was on track for its sixth consecutive daily loss against the dollar.
This comes after the Oct. 18 government announcement that Malaysia will see wider fiscal deficits and slower economic growth than earlier forecast for this year and through 2020. Malaysia's MIDF Amanah Investment Bank said, "the slowdown is expected particularly due to the moderating performance of external trade sectors." Lower oil prices have added to the country's economic problems.
The ringit has seen about 3 percent shaved off its value this year. South Korea's economy grew slightly slower than expected in the third quarter, and in line with the previous three-month period, as a plunge in domestic investment offset the positive effects from government stimulus and resilient exports. DBS, in a note, said the won "is about to resume its depreciation after consolidating between 1115 and 1135 in the past 3-4 months".
"Look for the won to keep heading south with equities into a weaker 1150-1200 range against the USD over the medium-term," the note added. The currency has lost about 6 percent against the dollar this year.
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