Singapore: Asian emerging market currencies extended losses on Tuesday, with the rupiah hitting a fresh four year low and the Indian rupee tumbling to a record low, as the prospect of a start to a withdrawal of stimulus by the US Federal Reserve kept drawing capital out of the region.
The Malaysian ringgit slid to its lowest in more than three years, while the Thai baht touched a one-year low.
Indonesia's rupiah and India's rupee, however, continued to be the most vulnerable due to widening in their current account deficits and other economic concerns.
On Monday, the 10-year US Treasury yield rose to as high as 2.90 percent, its highest since July 2011.
The rupiah's pain was exacerbated by a 5 percent slide for local stocks after they logged a 5.6 percent tumble on Monday and traders said key support levels for currency could be broken soon.
One-month non-deliverable forwards against the dollar slid to 11,090, their weakest level since April 2009.
Spot rupiah indicative prices were nominally at 10,490 to the dollar, but traders said actual dollar/rupiah bids were higher and the range of quotes was very wide, underscoring general reluctance on the part of banks to sell dollars.
Although local importers kept seeking dollars for payments, state-run banks, which operate on behalf of the central bank, were the only dollar sellers.
Chart support in the area around 10,650-10,700, the rupiah's highs in November 2008 and January 2009, looked vulnerable.
"It is very difficult to get dollars with only state banks providing," said a Jakarta-based trader. "If the current conditions continue, it is very probable for 10,700 to be broken."
Most Indonesian government bond yields rose with the 10-year yield at 8.384 percent, its highest level since March 2011.
The one-month offshore/onshore forward spread widened to 443 basis points, the widest since June 20.
The Indian rupee extended losses past 64 to a dollar on continued concerns about how the country will fund its current account deficit. For more coverage, please click
The ringgit fell 0.4 percent to 3.3005 to the dollar, its weakest level since June 2010, as local stocks lost nearly 2 percent and as 3-year and 5-year bond yields rose.
The ringgit might manage to to hold above 3.3000 in the short-term as the central bank was spotted intervening to support the currency, traders said, though in general they expect further weakening.
"The best thing is not to short the dollar as outflows from this region are continuing," said a senior Malaysian bank trader in Kuala Lumpur.
The ringgit is seen weakening to 3.3345, the 50 percent Fibonacci retracement of its appreciation between 2009 and 2011.
The baht lost as much as 0.9 percent to 31.65 per dollar, its weakest since August 3, 2012, under additional pressure as the economy shrank unexpectedly in the second quarter, slipping into a mild recession.
Foreigners sold local stocks seeking dollars, while real money and macro funds also offloaded the currency.
While the baht may find some support from exporters' bids for settlements, demand is expected to weak, traders said.
"The baht is on a weakening path since yesterday's second-quarter GDP was below expectations," said a Thai bank trader in Bangkok, adding that it could fall to 32.00.
The South Korean won fell with much of the selling done by offshore funds. But its downside was limited as foreigners continued to buy local stocks and exporters bought the won for for settlements, traders said.
First Published: Tuesday, August 20, 2013, 12:05