The Indian rupee and Indonesian rupiah led slides among emerging Asian currencies on Friday with regional units heading for weekly losses as solid US data caused some investors to factor in a less dovish stance for the Federal Reserve. China's manufacturing sector grew at the fastest pace in 18 months in October, according to two surveys, helping emerging Asian currencies recover some of Fridays initial losses.
Still, regional units stayed weaker on uncertainty over when the Fed will begin tapering its bond-buying programme. Both the rupiah and the rupee hit three-week lows as those currencies are seen most vulnerable to the Fed's tapering due to the current account deficits of those countries. Earlier, Indonesia reported a larger-than-expected September trade gap.
The dollar hit a two-week high against a basket of major currencies after data showing business activity in the US Midwest rose more than expected in October. Weekly US jobless claims also fell. The strong Chicago survey has fuelled speculation the national ISM survey of manufacturing, due later on Friday, could also surprise on the upside. "US ISM data will be released overnight, and while expected to come in a touch lower, should still indicate a very solid pace of expansion in the US manufacturing sector," Scotiabank said in a client note.
"This could further set up for Asian weakness on Monday as better US data may play off of the less dovish Fed statement," it added. Most emerging Asian currencies were poised to suffer weekly losses as the Fed's stable stance this week disappointed some who were expecting more dovish comments from the US central bank. For the week, the rupiah was down 2.8 percent against the dollar, which would be its largest weekly fall since late August, according to Thomson Reuters data.
The Malaysian ringgit has lost 0.8 percent, while the rupee has fallen 0.6 percent. The Singapore dollar has eased 0.5 percent and the Thai baht has shed 0.4 percent. The Philippine peso, which did not trade in the local market on Friday due to a holiday, lost 0.4 percent this week.
The rupiah lost as much as 1.0 percent for the day to 11,380 per dollar, its weakest since October 11, on sustained rises in government bond yields. Jakarta shares was down 1.1 percent, underperforming regional peers. The forward onshore market, or Jakarta Interbank Spot Dollar Rate (JISDOR), was fixed at 11,354 per dollar, compared with Thursday's 11,234. The rupiah spot pared some of earlier slides after data showed consumer prices in October rose less than expected.
The Indonesian currency, however, gave up most of the recovery to head to the session low as the September trade was $660 million, larger than a Reuters poll forecast of $70 million, with weaker-than-expected export growth. The ringgit fell in thin trading as government bond yields rose. The Malaysian currency recovered some initial losses on dollar selling for daily fixing.
Some investors bought the ringgit against the Singapore dollar on dips, limiting its loss against the city-state currency. Against Singapore dollar, the ringgit was down 0.4 percent to 2.5497, off the session low of 2.5613. The baht fell on weaker Bangkok stocks and as local bond yields jumped.