Most currencies in emerging Asia weakened on Thursday against the US dollar, after hotter-than-expected US inflation fuelled expectations for a Federal Reserve rate hike to push the dollar higher, while stocks in South Korea tanked 8%.
The Philippine peso hit a record low of 63.09 per dollar, while the South Korean won weakened 0.8% to a two-week low of 1,352.84 a dollar.
Taiwan’s dollar fell sharply to early August lows of 32.320 a dollar.
Overnight, Latin American currencies clocked their worst session in nearly two weeks, with Brazil’s real and Mexico’s peso slipping 0.4% and 0.7%, although the latter recovered some ground in early Asia trading hours.
An MSCI gauge of global emerging market currencies dipped 0.4% on its worst day in two weeks.
US consumer prices rose faster than expected last month, data showed, lifting expectations for an interest rate hike by the central bank over the course of the year ahead, possibly as soon as this month.
Fed rate hikes tend to boost the US dollar, putting pressure on emerging market currencies, fuelling capital outflows from their bond and stock markets, and increasing borrowing costs for dollar-denominated debt.
The US dollar index, which measures the greenback against a basket of major currencies, scaled a fresh 18-month high after the inflation data but had given up most of those gains to trade slightly lower by 0230 GMT on Thursday.
Emerging Asian equities were also on the backfoot, led by an a fall of 8% in South Korean stocks, putting it on track for a seventh consecutive session of losses.
Samsung Electronics and SK Hynix, the world’s leading memory chipmakers, dived 10% and 12%, respectively, for their worst day since late July.
Taiwan stocks also fell more than 3% to a near one-month low. TSMC, the world’s top contract chipmaker, also shed about 3% to hit a one-month low.
Stocks in Indonesia and Singapore and fell 1% each, taking those in the city-state to a three-month low, where top lenders DBS Group and OCBC slipped about 1% each.
Equities in Malaysia and the Philippines edged lower.
HIGHLIGHTS:
** Chinese yuan edges higher to 6.6923 per US dollar
** TSMC expected to report sixth straight quarter of record profit thanks to AI boom – Reuters
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