A Reuters survey of investors this week has shown increased bearishness on the Indonesian rupiah, Singapore dollar and Indian rupee. Each of the Asian currencies has lost value this year amid concerns for global trade and following emerging market currency crises in Argentina and Turkey.
Among emerging market central banks, Bank Sentral Republik Indonesia has been one of the most vigilant this summer in terms of its attempts to halt currency weakness. The bank has hiked interest rates several times since May to a two-year high of 5.5 percent, but as yet, has been unable to curb the rupiah’s slide.
On Friday, as the dollar heads higher ahead of the potentially headline-grabbing Jackson Hole symposium, the rupiah weakened to Rp.14,625. It nears its cheapest levels against the dollar since 2015 and has lost 7.2 percent of its value this year.
The Indian rupee remains 2018’s worst performing Asian currency, having weakened by more than 9 percent.
The rupee struck an all-time low of 70.80 to the dollar on August 15th and faces an additional threat from higher oil prices. Being India’s largest import, a higher oil price worsens the country’s trade deficit and raises inflation, which is already above target. Oil’s stumble over the past six weeks has helped the rupee recover into the low 70s, where it remains as of writing.
In Singapore, economic growth will fall sharply in the second half of the year, economists warn. Singapore’s GDP grew 4.2 percent between January and June based on data from the Ministry of Trade and Industry, but July-December growth is likely to slow to sub-2 percent levels.
Versus the US dollar, the Singapore dollar weakened to S$1.3819 on August 15th – its cheapest level in thirteen months – but has since recovered to S$1.3730; it has lost 2.6 percent of its value this year.
The Singapore dollar is, however, breaking important levels against the politically-driven Australian dollar. The AUD/SGD cross rate is back below parity, at S$0.9975.
The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.
Last update: 2 Jul, 2019
The British pound was the worst-performing major currency in the April-June period and remains “impossible to forecast” amid a Tory leadership battle that might force “no deal” or a general election.
Last update: 30 Jun, 2019
With AUD-THB at a 10-year low, Australians travelling this year to Thailand’s wildly popular resorts are facing holiday costs 50 percent higher than those paid in 2012. With exchange rates as they are, those in Oz are choosing better-value destinations.
Last update: 23 Jun, 2019