The MSCI Asia-Pacific Index (MXAP) of shares dropped 0.7 percent, following a 1.5 percent slump yesterday. Spain, struggling with a budget deficit that hasn’t been under the European Union’s 3 percent limit since 2007, sold 2.6 billion euros ($3.4 billion) of notes yesterday, short of its 3.5 billion euros target. European Central Bank President Mario Draghi said talk of an early exit from support for its banks is “premature.”
“Spain’s bond auction and comments from the ECB President hurt sentiment toward riskier assets, and that is making the dollar stronger against regional currencies,” said Norawit Suparinayok, a foreign-exchange trader at Bangkok Bank Pcl. “Europe’s debt problem is deep and it’s difficult to solve.”
The rupiah dropped 0.3 percent to 9,165 per dollar as of 9:43 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. Taiwan’s dollar slipped 0.2 percent to NT$29.523 and China’s yuan weakened 0.16 percent to 6.3078 from March 30. Onshore Chinese financial markets were closed for the first three days of the week.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-used currencies excluding the yen, fell for a third day, while its 60-day historical volatility was little changed at 3.36 percent.
Taiwan Tax
The rupiah dropped the most in two weeks on speculation importers were taking advantage of a more favorable exchange rate to buy dollars. The Indonesian currency touched 9,123 per dollar on April 3, the strongest level in two weeks.
“The rupiah can’t strengthen too sharply, considering we see much demand for dollars from importing companies that need to make payments,” said Gusti Kahari, a foreign-exchange dealer at PT Bank Artha Graha Internasional in Jakarta.
Taiwan’s dollar fell the most in more than three weeks after the island’s stock exchange signaled plans to impose a capital-gains tax on share transactions, pushing the benchmark share index down as much as 3 percent.
“The Taiwan dollar is falling because the stock market is lower,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei.
The yuan fell the most in three weeks amid speculation China will counter appreciation to combat a slump in exports. The People’s Bank of China weakened its daily reference rate by 0.15 percent to 6.3035 per dollar.
Slowing Chinese Growth
A government report on April 10 may show exports grew 7 percent in March from a year earlier, easing from an 18.4 percent pace in February, according to the median forecast in a Bloomberg News survey. Gross domestic product increased 8.4 percent in the first quarter, the least since 2009, according to a separate poll before data due April 13.
“They are trying to keep the yuan as weak as possible during the month to help exporters,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “I would expect a depreciation of the Chinese currency going into April, especially around the first-quarter GDP next Friday.”
Elsewhere, Malaysia’s ringgit was little changed at 3.0656 per dollar and South Korea’s won was steady at 1,129.50. Vietnam’s dong rose 0.1 percent to 20,725. Financial markets in India and the Philippines are closed for public holidays.
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