Asian currencies fall a fifth month in longest streak since 1998

[KUALA LUMPUR] Asia's emerging-market currencies retreated for a fifth month, the longest run of declines since the region's financial crisis in 1998, as monetary easing by nations including Singapore and India spurred demand for dollars.

The Federal Reserve bolstered its assessment of the US economy while repeating a pledge to stay "patient" on raising interest rates this week as reports in January showed jobless claims fell and hiring rose. Singapore said it would slow the pace of exchange-rate appreciation against a basket of currencies, becoming at least the ninth nation to loosen policy this month.

"The US central bank seems to be one of the few in the world that looks like it's going to be raising interest rates this year," said Jonathan Cavenagh, a strategist at Westpac Banking Corp. in Singapore.

"There've been fresh easing measures from banks like the Monetary Authority of Singapore which have surprised the market."

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 most-active currencies excluding the yen, dropped 0.5 per cent in January as of 5:22 pm in Hong Kong, contributing to a 3.8 per cent retreat since August.

The Monetary Authority of Singapore will reduce the slope of the policy band for the island's dollar, while keeping a "modest and gradual appreciation," the authority said January 28. The move follows surprise interest-rate cuts by Denmark, Turkey, India, Canada and Peru this month as global central banks seek to shore up growth amid dwindling inflation. The European Central Bank announced a bond-buying program that will debase the euro.

The ringgit retreated 3.6 per cent in January, Asia's biggest decline, as a 14 per cent slump in Brent crude worsened prospects for Malaysia, a net oil exporter. Indonesia's rupiah lost 2.3 per cent, the Singapore dollar depreciated 1.8 per cent, and South Korea's won fell 0.3 per cent.

China's yuan weakened 0.8 per cent, a third monthly decline, after reports showed Chinese industrial profits fell the most in at least three years in December and the nation's foreign- exchange reserves dropped for a fourth month.

"A combination of reasons, including the stronger US dollar, the slowing Chinese economy and capital outflows have been making the yuan weaker in the past three months," said Chen Hufei, a Shanghai-based macroeconomic policy analyst at Bank of Communications Co, the nation's fifth-largest lender.

Cheaper oil gave a boost to the currencies of India and the Philippines, with the rupee strengthening 1.8 per cent in January and the peso advancing 1.4 per cent. Taiwan's dollar rose 0.5 per cent, Thailand's baht gained 0.5 per cent and Vietnam's dong rose 0.2 per cent.

BLOOMBERG