Asian currencies weakened against a stronger dollar on Thursday as fears of the economic impact from the coronavirus outbreak prompted a wider sell-off in the region.
The epidemic, which has disrupted businesses and global supply chains, has raised worries over fallout on regional economies with trade and travel ties with China.
“South Korea and Singapore are two countries that have been quite affected by the coronavirus,” said Junvum Kim, sales trader at Saxo Capital Markets.
“The coronavirus cases have risen considerably higher compared to other countries, apart from China, and that is having quite a negative impact on those two countries.”
The South Korean won fell 1 percent to its lowest level since Oct. 4, after the government reported 31 new cases, bringing the total number of people infected in the country to 82.
The Singapore dollar fell about 1 percent to its lowest level in nearly three years. The city-state had reported a total of about 77 cases of coronavirus as of Tuesday.
Australia and New Zealand Banking Group downgraded Singapore’s GDP growth forecast for 2020 to 0.4 percent, from 1.5 percent previously, citing a significant impact from the virus in the first quarter.
Broad-based gains in the dollar following a steep slide in the Japanese yen also led investors away from riskier local currencies.
The Thai Baht fell as much as 0.8 percent to touch its weakest level in over eight months.
The Chinese yuan slipped 0.3 percent after the central bank cut the benchmark lending rate, as widely expected, to support an economy jolted by the virus outbreak.
The Indonesian rupiah declined 0.6 percent ahead of Bank Indonesia’s decision on interest rates. A slim majority of analysts polled by Reuters expect the central bank to resume its easing cycle at its policy meeting this week to cushion the economic impact from the coronavirus outbreak.
“While BI (Bank Indonesia) preference is for a stronger IDR (Indonesian rupiah), headwinds to growth have intensified and this will likely take precedence,” a Mizuho note said. — Reuters
