Weekend Economists Examine (E)sc(h)atology January 24-26, 2014

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31. Won Leads Weekly Drop in Asia Currencies on Fed Bets, China Data

http://www.bloomberg.com/news/2014-01-25/won-leads-weekly-drop-in-asia-currencies-on-fed-bets-china-data.html

Asian currencies fell this week, led by South Korea’s won, as Chinese economic data missed estimates and a stronger U.S. recovery added to speculation the Federal Reserve will cut its stimulus further.

The Bloomberg-JPMorgan Asia Dollar Index (ADXY) dropped for a second week as reports showed U.S. December sales of existing homes capped the best year since 2006 and jobless claims held near a six-week low. Signs of a sustained economic pickup fueled bets the Fed will continue to reduce bond-buying that has spurred fund flows to emerging markets. Manufacturing in China, Asia’s biggest economy, may have contracted this month, a preliminary reading showed on Jan. 23.

“Weak data in China are strengthening demand for safety assets like the dollar,” said Hong Seok Chan, a currency analyst at Daishin Economy Research Institute in Seoul. “U.S. tapering expectations offer a continued boost for the greenback.”

The won recorded its worst week in seven months, slumping 1.9 percent from Jan. 17 to 1080.36 per dollar, data compiled by Bloomberg show. Malaysia’s ringgit slid 1.1 percent, its biggest weekly loss in a month, to 3.3334. India’s rupee dropped 1.8 percent, the most since August, to 62.6850 and Indonesia’s rupiah fell 0.7 percent to 12,180.