Most Asian currencies dropped on Friday as a run of data around the world heightened concerns over a slowing global economy in a blow to investor risk appetite. Recent manufacturing sector surveys in the United States, Europe and Japan predicted a contraction in production levels amid shrinking demand for their exports. On Thursday, the United States saw an unexpected fall in core capital goods orders pointing to a slowdown in business spending.
The weak global growth impulse boosted US Treasury yields, which in turn underpinned the dollar index. Saktiandi Supaat, head of FX research at Maybank in Singapore, said anxiety around the outcome of the Sino-US trade war and concerns the global economy is slowing at a faster than expected pace could curb see currency market activity.
Reuters reported exclusively on Wednesday that China and the Unites State, currently engaged in high-level talks in Washington, were drafting language for six memorandums of understanding on proposed Chinese reforms. "Disappointment on the outcome of the trade talks could derail sentiment and provide some support for the dollar," said Maybank's Supaat.
US President Donald Trump will meet with Chinese Vice Premier Liu He, who is leading trade talks with US officials in Washington, at the White House on Friday, the White House said on Thursday. The Thai baht led the region's declines, shedding 0.3 percent on Friday. The baht has gained over 4 percent this year though in recent weeks worries about an upcoming election has cooled investor interest toward Thai assets.
Foreign investors have sold Thai equities in eight out of the last nine trading sessions, the stock exchange data showed, as worries about potential political instability grip the nation ahead of elections in March. The Chinese yuan and the Malaysian ringgit gave up 0.1 percent each, while the Indian rupee edged higher on falling crude oil prices.
Malaysia's consumer prices fell 0.7 percent in January from a year earlier, the first decline in nearly a decade, government data showed on Friday. The Indonesian rupiah inched lower, but was set to register its biggest gain in three weeks. Indonesia's central bank kept interest rates on hold on Thursday and said it was looking at ways to boost loan growth, but indicated it was in no hurry to start rolling back last year's six benchmark hikes.
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