Most emerging Asian currencies weakened against the US dollar, but posted weekly gains, supported by prospects of stimulus measures by policymakers to shield their economies from the impact of the coronavirus outbreak.
The outbreak in China showed no signs of peaking with health authorities on Friday reporting more than 5,000 new coronavirus cases and 121 new deaths.
Economists are scaling back growth expectations for the Chinese economy in the current quarter, though they say the downturn will be short-lived if the outbreak is contained.
“We need concrete evidence that economic data is not going to be worser than what we think it is. The Asian currency landscape is however not bad, because we have the People’s Bank of China (PBOC) guiding or trying to keep the yuan trading below 7 and there is still demand for carry trades,” Stephen Innes, chief market strategist at AxiCorp said.
The onshore Chinese yuan weakened against a slightly stronger dollar.
The South Korean won pared early losses to trade a tick lower, finding some support as the country’s two economic policy chiefs pledged to deploy emergency measures to minimize the economic impact from the coronavirus outbreak.
South Korea’s central bank chief also said on Friday that the bank must take a cautious approach to any further rate cuts.
The Singapore dollar and Thai baht eased slightly during the day, while the Malaysian ringgit strengthened.
Currencies of tourist hubs such as Singapore, Thailand and Malaysia have relatively been more affected by the virus outbreak as it threatens a slowdown in Chinese trade and visitors from China.
Thailand’s tourism ministry on Thursday said the number of foreign tourists in the country slumped nearly 40 percent between Feb. 1 and 7.
Meanwhile, central banks of Malaysia and Thailand have cut their policy rates by 25 basis points this year.
While the Philippine peso, Indonesian rupiah, and Indian rupee weakened between 0.1 percent and 0.2 percent during the session, analysts say the high yields offered by these currencies have helped them weather the virus storm stronger than their peers.— Reuters
