Higher US yields, Greece woes hurt Asia Forex

18/05/2015 10:36 AST

Most emerging Asian currencies slid on Tuesday as persistent anxiety over Greece's debt problems and further volatility in global debt markets dented risk sentiment. The Indonesian rupiah fell as some analysts warned of risk that the central bank could cut interest rates at a policy review later in the day.

Most economists polled by Reuters had expected Bank Indonesia to hold its key rate steady, although the country's growth rate has fallen to its weakest since 2009.

South Korea's won slid as a weaker yen spurred caution over possible intervention by the foreign exchange authorities to support growth in Asia's fourth-largest economy.

The Malaysian ringgit eased on lower oil prices and as the 10-year bond prices fell.

The U.S. dollar hit a near one-week high against six major currencies as 10-year Treasury bond yield held steady after rising 9 basis points on Monday. The rise came even as weak U.S. housing data indicated sentiment among homebuilders slumped in May.

"Despite weak U.S. economic data, the time for the Fed rate hike is still coming as hopes for a recovery in the second quarter stayed alive," said Seungji Jeon, Samsung Futures' FX analyst in Seoul, referring to the U.S. Federal Reserve.

"If yields in developed markets continue to rise, the risks of bond outflows from Asia would grow. That will put pressure on currencies."

The U.S. central bank could look at a rate hike in June if the economy is strong enough, Chicago Fed President Charles Evans said on Monday. The world's top economy is probably not as weak as current estimates suggest, a paper published Monday by the Federal Reserve Bank of San Francisco said.

Economic Times