Most emerging Asian currencies slipped on Monday as rising US bond yields buoyed the dollar, a move that particularly hurt sentiment toward countries where foreign investors have large domestic bond holdings. The dollar's index against a basket of six major peers rose as much as 0.2 percent to 90.447.
"This was expected to happen given the markets' intense focus on US yields, especially 10-year yields, which ratcheted higher," said Stephen Innes, head of trading APAC at Oanda. US 10-year Treasury yield touched a peak of 2.979 percent, the highest since January 2014, adding to gains made last week after Federal Reserve officials signalled further interest rate increases in 2018 thanks to evidence of steady US growth.
The Indonesian rupiah slipped 0.1 percent to its weakest since January 2016. "Rising US bond yields triggered the drop in the rupiah. It's one area in the region that's totally exposed - most of the bonds are owned by foreign investors," said Innes.
Foreigners held 39 percent of Indonesian government bonds at the end of March, data from Bank Indonesia showed. Innes also said recent oil prices, which had hit multi-year highs, also added to bearishness in large segments of the Asian market and could hurt currencies of oil importing countries, such as India and the Philippines.
The Philippine peso, the worst performing currency in the region so far this year, was 0.2 percent weaker. The Indian rupee fell as much as 0.2 percent to its lowest level since March 2017, and was headed for its sixth straight session of declines.
The rupee fell 0.5 percent on Friday while Indian bond yields spiked after the minutes of the monetary policy panel meeting suggested that they were likely to take a more hawkish tone starting as early as June. The Thai baht slipped 0.3 percent, while the South Korean won was 0.2 percent weaker.
Data showed Thailand's customs-cleared annual exports increased at a slower pace in March compared with the previous month, due partly to a high comparative base last year, and the growth was slightly below forecast. The Chinese yuan was the only gainer in the region, up 0.1 percent.
However, Innes said a further pick up in the dollar could see even the yuan weaken off "considerably". The Taiwan dollar lost 0.3 percent to hit its weakest level since mid-January.
"There's negative outlook in the semiconductor area," said Innes. "We've seen the Apple stock wobble a little bit, so that's playing negatively into the tech sector." The Taiwan SE Weighted Index was down 0.8 percent at close, weighed down by the information technology sector.