SOUTHEAST Asian currencies grappled with the economic damage from the coronavirus that pushed many countries to enforce shutdowns.
The Singapore dollar fell 0.2 percent against the greenback, while the Philippine peso weakened to close at 50.595, 0.165 centavos lower the the previous close of 50.43.
Over the weekend, Bangko Sentral ng Pilipinas governor signalled more cuts in its policy interest rate to cushion the economic blow of the coronavirus.
To date, the bank has slashed its interest rate by a total of 75 basis points to 3.25 percent.
The Indonesian rupiah was one of two emerging Asian currencies to drift higher on Monday in the run-up to a policy decision.
While a small majority expect Bank Indonesia (BI) to keep its benchmark rate on hold on Tuesday, the central bank is likely to weigh the pressures forced upon the country by the pandemic and that of the volatility it has caused to its currency.
The International Monetary Fund had warned last month that the pandemic has already driven the global economy into recession and countries must respond with “very massive” spending.
“Rate cuts alone are not going to matter. Demand in the system cannot come back because of a rate being cut by 25 or 50 basis points. You need measures that will basically keep the system running and not collapse,” said Sunil Kalra, a portfolio manager at LC Beacon Global Fund based in Singapore.
The Indonesian rupiah advanced 0.1 percent against the U.S. dollar at 15,785 on Monday, its strongest level since March 19. The decision comes on the back of a 4 percent gain last week, its first weekly gain in four, after the government sold US dollar bonds of $4.3 billion and as the BI secured a $60 billion repo line with the US Federal Reserve.
Elsewhere, the South Korean won sharply weakened 0.9 percent as the impact on the trade-reliant economy from the pandemic was evident when exports in the first 10 days of April dived 18.6 percent from a year earlier.
Despite an agreement by major producers for the biggest ever output cut, oil prices still remain at a little over $30 a barrel, a far cry from what they were earlier this year.
India, a major oil importer, would ordinarily stand to benefit from low prices, but investors are also noting a likely extension to the country’s 21-day lockdown that is due to end on Tuesday.
India’s rupee weakened 0.2 percent to 76.4, roughly around the weakest level it has ever been at.
“In the medium run, this oil price means a lot to India. Probably one of the biggest oil price drops in a long time, and that’s going to have a massive impact on the Indian rupee,” Kalra said.
While an official federal government announcement is yet to be made, several states in Asia’s third-biggest economy have independently said they would extend the lockdown.
