Asian currencies have biggest weekly drop since April

Asian currencies recorded their biggest weekly decline since April as an improving US economy spurred speculation the Federal Reserve will bring forward its timetable to raise interest rates.

Fed officials review policy September 16-17 after reports this week showed US job openings held close to a 13-year high in July and consumer credit growth exceeded economists' estimates. An increase in interest rates in the world's largest economy would reduce the lure of higher-yielding emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index dropped 0.4 per cent from September 5, the steepest decline since the period ended April 25. South Korea's won weakened 1.1 per cent to 1,035.35 a dollar in Seoul, data compiled by Bloomberg show. India's rupee fell 0.4 per cent to 60.66 and Thailand's baht declined 0.7 per cent to 32.198. "People are revising their expectations about US monetary policy," said Tim Condon, the Singapore-based head of Asian research at ING Groep NV.

"The improvement in the labor market is happening at a quicker rate than people had anticipated and this warrants a faster withdrawal of accommodation." There's a 61 per cent chance the Fed will raise its benchmark to at least 0.5 per cent by July 2015, futures trading showed September 11. The likelihood was 52 per cent at the end of August. The US central bank has held the rate target in a range of zero to 0.25 per cent since 2008 to spur economic growth.

Rate decisions
The baht recorded its biggest weekly drop in more than a month after foreign funds pulled a net $499 million from Thai local-currency bonds in the week, exchange data show. The Bank of Thailand will keep its key rate at two per cent on September 17, according to all 17 analysts surveyed by Bloomberg.

"Global investors have cut their exposure to debt instruments in Thailand and most other emerging markets as strong US economic growth bolsters the dollar," said Chajchai Sarit-Apirak, a Bangkok-based fixed-income manager at Kasikorn Asset Management Co.

The Bank of Korea kept borrowing costs unchanged at 2.25 per cent on Friday, as predicted by all 20 economists surveyed by Bloomberg. Local financial markets were shut for the first three days of the week for the Chuseok holidays. Bangko Sentral ng Pilipinas raised its benchmark rate to 4 per cent from 3.75 per cent on September 11.

China's yuan climbed to a six-month high on September 10 after the central bank raised the currency's daily fixing by the most in almost four years the day before, following a report showing the nation posted a record trade surplus. The yuan strengthened for a third week, rising 0.11 per cent to 6.1346 a dollar, China Foreign Exchange Trade System prices show.

Elsewhere in Asia, the Philippine peso fell 0.6 per cent to 43.915 a dollar and Indonesia's rupiah declined 0.5 per cent to 11,818. The Malaysian ringgit retreated 0.5 per cent to 3.1972, Taiwan's dollar depreciated 0.2 per cent to NT$30.068 and the Vietnamese dong was little changed at 21,200.