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Asian currencies subdued by Trump woes, 11-year low for Philippine peso

by August 18, 2017 General

The Philippine peso lost up to 0.5 per cent for its 10th straight session of losses. — Reuters picThe Philippine peso lost up to 0.5 per cent for its 10th straight session of losses. — Reuters picSINGAPORE, Aug 18 — Most Asian currencies were subdued today, while the Philippines peso hit a fresh 11-year low, as markets shied away from riskier assets amid rising doubts about US President Donald Trump’s ability to push through his economic agenda.

Investors fretted over the implications for Trump’s plans for tax cuts and infrastructure spending after the president disbanded two high-profile business advisory councils on Wednesday. That action came after several chief executives quit in protest over Trump’s remarks on violence in Virginia.

Most of the regional currencies traded flat, with the exception of the South Korean won which fell as much

0.6 per cent, and the Philippine peso lost up to 0.5 per cent for its 10th straight session of losses.

On the week, though, the won gained 0.2 per cent, snapping three weeks of losses.

“I think a large part of it is still the risk appetite not returning, there is very cautious trading,” said Christy Tan, head of markets strategy, National Australia Bank in Hong Kong.

Ahead of the weekend, investors are also wary of the risk of a flare-up in tensions in the Korean peninsula,” Tan said, adding “so that is still keeping everyone on the defensive.”

The Taiwan dollar declined 0.1 per cent ahead of revised second quarter gross domestic product numbers due out later in the session, while the Chinese yuan fell 0.05 per cent.

The Malaysian ringgit was marginally lower, largely shrugging off data showing the economy grew at a faster than expected pace in the second quarter.

On the other hand, the Thai baht and the Singapore dollar edged up, adding 0.1 per cent each.

Philippine peso

The Philippine peso fell to another 11-year low today, its third time this week, having only briefly pulled ahead in the previous session when data showed economic growth quickened at a solid pace in the second quarter.

“While we saw positive GDP, the general confidence regarding the Philippines is still quite soft given that the trade performance has been very disappointing, and that is something everyone is more focused on and it’s not helping the peso in any way,” Tan said.

A government-driven infrastructure drive has seen a surge in capital goods imports, and accounted for a sizable reason for a trade deficit of US$13.2 billion (RM56.7 billion) in the first half of the year.

That puts the nation on track for its first annual current account deficit in 15 years – an unfavourable state of affairs for the peso especially as traders worry about how the gap would be funded if foreign investment doesn’t keep pace. — Reuters