Wednesday in Asia, the Southeast Asian currencies slumped to new multi-day lows against the dollar as a retreat in global stocks reduced demand for emerging-market assets.
The stock markets across the Asia-pacific region are trading in negative territory today, taking cues from Wall Street where the major indices declined for the second consecutive day as traders expressed some anxiety about the upcoming earning season and stocks' ability to sustain the recent upward move in light of expectations of weak quarterly results.
Alcoa, which kickstarted the earnings season in the U.S., released first quarter results after the markets closed, reporting a net loss that was worse than analysts' expectations, with the company attributing the impact of the economic downturn to its core industrial and commercial markets as well as a historic decline in aluminum prices.
The Southeast Asian currencies also came under heavy selling pressure after the World Bank lowered its growth forecast for developing East Asia and said a strong growth in China would pave the way for the region's recovery.
The Washington-based World Bank forecast real GDP growth in developing East Asia to slow to 5.3% this year from 8% recorded in 2008. It was down from the bank's earlier forecast of 6.7% growth.
Weaker growth is expected to add the number of poor in the region. Nearly 10 million more people are expected to remain in poverty compared with 2008 forecasts, the Bank said yesterday in its latest East Asia and Pacific Update, titled 'Battling the Forces of Global Recession'.
The World Bank said China remains a bright spot in the region and the global economy amid signs that economic activity may be bottoming out. A recovery in China, likely to begin this year and take full hold in 2010, should contribute strongly to the region's recovery, it added.
Further, the Bank noted that fiscal stimulus packages can only partially offset the negative impact of the crisis on growth in most countries. The increased fiscal deficits and sizable principal repayments due will be a burden for some governments in the East Asia and Pacific region, the Bank warned.
Against the U.S. currency, the Singapore dollar plunged to a 6-day low of 1.52 during early Asian deals on Wednesday. The next downside target level for the Singapore dollar is seen at 1.525. The pair was worth 1.5131 at Tuesday's New York session close.
The Hong Kong dollar that gained against the US currency in early Wednesday Asian trading lost ground after hitting a 2-day high of 7.7498 at 8:00 pm ET. As of now, the pair is worth 7.7512 with 7.7525 seen as the next target level. The pair closed Tuesday's deals at 7.7502.
The Hong Kong Monetary Authority said yesterday that the official foreign currency reserve assets stood at US$ 186.2 billion at the end of March, up from US$ 177.1 billion at the end of February. The foreign currency reserve assets of US$186.2 billion represent about eight times the currency in circulation or 45 percent of Hong Kong dollar M3. Hong Kong was the eighth largest holder of foreign currency reserves after Mainland China, Japan, Russia, Taiwan, India, Brazil and Korea, the agency said.
During early Asian deals on Wednesday, the Thai baht edged down against the US dollar. The dollar-baht pair that closed yesterday's trading at 35.46 reached 35.6350 at 11:05 pm ET. This set a 1-week low for the Thai baht. On the downside, 35.70 is seen as the next target level for the Thailand currency.
Today, the central bank of Thailand is scheduled to announce its decision on interest rates. Analysts are expecting the bank to lower rates by 50 basis points, to 1 percent from the current 1.50 percent.
The Malaysian ringgit fell to a 6-day low of 3.6383 against the US dollar in early Asian deals on Wednesday. This may be compared to Tuesday's closing value of 3.5925. If the Malaysian currency weakens further, it may test support around the 3.66 level.
In early Asian trading on Wednesday, the Philippine peso slipped to a 5-day low of 48.1150 against the US dollar. The next likely support for the Philippine currency is seen at 48.5. At yesterday's close, the dollar-peso pair was quoted at 47.73.
The South Korean won that closed yesterday's trading at 1318.60 against the dollar declined to a 5-day low of 1362.10 during Asian deals on Wednesday. The next downside target level for the Korean currency is seen at 1391.3.
A report released by the Ministry of Knowledge Economy and the Korea Plant Industries Association revealed that industrial plant orders plunged 61.3% year-on-year during the first quarter of 2009 to US$ 4.9 billion from US$11.2 billion reported last year, as businesses and government tightened spending amid the global economic crisis.
During early Asian deals on Wednesday, the Taiwan dollar weakened to a 1-week low of 33.9075 against the U.S. currency. On the downside, 33.951 is seen as the next target level for the Taiwan dollar. The pair was worth 33.6170 at Tuesday's close.
In economic news, Taiwan's exports plunged 35.7 percent year-on-year in March to US$15.59 billion, the Finance Ministry said yesterday. The decline was close to analysts' expectations for a 35.3 percent fall and it was the seventh consecutive month of decline. Total imports amounted to US$12.17 billion, down 49.5 percent over the same month of last year, sharper than the expected 44.5 percent decline, resulting in a trade surplus of US$3.41 billion in March.
The Chinese yuan plummeted to a 16-day low of 6.8427 against the US dollar in Asian deals on Wednesday. If the Chinese currency drops further, it may likely target the 6.847 level. At yesterday's North American session close, the dollar-yuan pair was quoted at 6.8375.
The People's Bank of China has set today's central parity rate for the dollar-yuan pair at 6.8370. The pair is allowed to strengthen or weaken 0.5% from the parity rate.
Wednesday, the Indian rupee opened lower against the US dollar. Currently, the rupee is trading at a 1-week low of 50.67 per dollar, compared to 49.97 hit late New York Tuesday. On the downside, 50.78 is seen as the next target level for the Indian currency.
The US Commerce Department is due to release its wholesale inventories report at 10 am ET today. Economists expect wholesale inventories at the end of February to show a 0.6% decline.
The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 am ET.
At 2:00 pm ET, the Federal Reserve is scheduled to release the minutes of its March 17th-18th meeting.
Along with an announcement to keep interest rates unchanged at exceptionally low levels following its two-day FOMC meeting in March, the Fed said it would purchase $300 billion worth of longer-term securities over the next 6 months. Additionally, the Fed said it will buy an incremental $750 billion worth of mortgage-backed securities and $100 billion of government sponsored enterprises - GSE debt. The Fed also said it intends to add $100 billion to its purchases of agency debt.
For comments and feedback: contact email@example.com