SINGAPORE (Bloomberg) - Asian currencies headed for their biggest weekly drop since January, led by Singapore's dollar and Thailand's baht, as the greenback strengthened on signs the U.S. is moving closer to raising borrowing costs.
The Bloomberg Dollar Spot Index, which tracks the currency against 10 peers, rallied this week as minutes of the March policy meeting released on Wednesday showed there was some support for a June rate increase. The Singapore dollar fell the most in a month before a central bank review on Tuesday at which it may ease for the second time this year.
The Bloomberg-JPMorgan Asia Dollar Index dropped 0.7 per cent from April 3 as of 11:58 a.m. in Hong Kong, according to data compiled by Bloomberg. The Singapore dollar weakened 0.7 per cent to $1.3593 against its U.S. counterpart, Thailand's baht declined 0.4 per cent to 32.54 and China's yuan fell 0.23 per cent to 6.2093.
"Nobody wanted to be giving up entirely on the dollar," said Leong Sook Mei, the Singapore-based Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. "There's uncertainty over whether there will be a June or September Fed rate rise."
The Fed's March meeting occurred before the release of disappointing jobs growth figures last Friday.
The Monetary Authority of Singapore, which uses its currency rather than interest rates as its major monetary policy tool, eased in an unscheduled announcement in January. Six of 12 economists surveyed by Bloomberg forecast the city-state's central bank will maintain the current policy stance on April 14, while the rest expect it to ease again.
The yuan headed for its biggest weekly drop in more than a month as China's economy showed no signs of picking up. Consumer prices rose 1.4 per cent in March from a year earlier, compared with the 1.3 per cent median estimate in a Bloomberg survey, according to official data released on Friday. Producer prices fell 4.6 per cent, dropping for a 37th month.
"Deflation pressure didn't worsen, but inflation is still low," said Liu Dongliang, a senior analyst at China Merchants Bank in Shanghai. "China's economy still lacks momentum, and more monetary easing is needed. The advancing dollar is having a large impact on the yuan."
Elsewhere in Asia, South Korea's won fell 0.1 per cent this week to 1,093.82 a US dollar. The Philippine peso rose 0.2 per cent to 44.495, India's rupee advanced 0.2 per cent to 62.3713, Malaysia's ringgit strengthened 0.6 per cent to 3.6465 and Indonesia's rupiah climbed 0.7 per cent to 12,913. Taiwan's dollar gained 0.5 per cent to NT$31.158 -