Various Asian units declined against the American currency yesterday, after regional stock markets experienced losses.
In Hong Kong, Hang Send Index showed loss 194.9 points and closed at 18,058.49 whilst in Japan, Nikkei 225 declined by 0.8 percent, to close at 9,786.82.
Heavy selling generated frenzy from Asian units that caused Indonesia’s currency to decline to 10,060 rupiahs per US$1 from 10,025 rupiahs per US$1. The Korean won also slid in value as it dropped from 1,252.5 to 1,263.7.
The Philippine peso and the Singaporean Dollar were not spared. The Philippine Peso experienced its lowest point since May 18 2009. It plunged to 47.745 against the US dollar. The Singaporean Dollar also weakened not only against the US dollar but against the Japanese Yen, Australian Dollar, British Pound and the Euro.
On the other hand, other exchanges experienced loss early that day, but recovered later.
The Intercontinental Exchange (ICE) tracks the greenback against the Swedish Krona, Yen, Euro, Swiss Franc, Pound and Canadian Dollar using the Dollar Index. It has shown a rise from 80.909 to 80.921 yesterday, the highest since May 20, 2009. What’s more, the index rose to 3.3 percent from the year’s low of 78.334 recorded on June 2.
Meanwhile, gold fell as the dollar continued to advance. But oil and crude oil continued to rise as well.
According to various reports, the rise in the Dollar Index may have contributed to yesterday’s Asian currency sell-off.
JP Morgan, a world leader in financial services, identified three factors that will help support the credibility of the sell-off:
First, the stability of the US Treasury market; second, the strength of the consumption recovery, a result that is stronger-than-expected; and third, US consumer price index data for the month of May.
According to JP Morgan, “…this third factor… could unhinge foreign demand for US assets and the dollar…” and adds, “Nonetheless…global risk aversion would likely rise as well, which is negative correlated with Asia FX performance.”
This week, however, Asia will focus on China’s industrial production numbers for retail sales and trade.