Most Asian currencies fell on Thursday as uncertainty mounted over US President Donald Trump’s future following reports that he tried to interfere with a federal investigation. Pressure on the White House has intensified after Trump fired FBI Director James Comey, who had been leading a federal probe into possible collusion between Trump’s 2016 campaign team and Russia. Later, Washington was rocked by reports that Trump had asked Comey to end the FBI investigation into ties between Trump’s first national security adviser, Michael Flynn, and Russia, a serious allegation that could lead to Trump’s impeachment if verified.
The Justice Department has named former FBI chief Robert Mueller as special counsel to investigate the alleged Russian interference. “Impeaching Donald Trump was a pipe dream for the Democrats but extremely unlikely to most other observers until a few days ago. Whether it would succeed is another story,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“As it drags on, it hurts sentiment and threatens the administration’s agenda, especially around tax and infrastructure.” The Korean won was the biggest loser among Asian currencies, sliding as much as 0.8 percent in its biggest intra-day percentage fall in nearly five weeks. South Korean President Moon Jae-in said on Wednesday there was a “high possibility” of conflict with North Korea, which is pressing ahead with nuclear and missile programmes it says are needed to counter U.S. aggression.
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The Singapore dollar hit a six-month high before reversing course to trade slightly down. The yen weakened 0.3 percent, shrugging off data that showed Japan’s economy grew in the first quarter at its fastest pace in a year to mark the longest period of expansion in a decade.
The Chinese yuan was slightly down after four sessions of gains. Net foreign exchange sales by China’s commercial banks in April rose to their highest in three months, but capital outflows remained under control due to tighter regulatory scrutiny. China has tightened rules on moving capital outside the country in recent months as it seeks to support the yuan.
Meanwhile, the Thai baht gained 0.2 percent against the dollar. Thailand’s high household debt level fell last year and should continue doing so as the economy is recovering, the central bank governor said on Wednesday.
The Philippine peso slipped 0.2 percent against the dollar after data showed that the economy grew at its slowest pace in one-and-a-half years. The economy expanded 6.4 percent in the first quarter from a year ago, below market expectations, data from the statistics agency’s website showed. Economists polled by Reuters had forecast the economy to expand at an annual 6.8 percent, compared with 6.6 percent in the last three months of 2016.
The Indonesian rupiah fell 0.1 percent ahead of the central bank’s decision on a key rate later in the day. Bank Indonesia (BI) is expected to hold the 7-day reverse repurchase rate at 4.75 percent, all but one of 20 analysts in a Reuters poll predicted. The other analyst forecast a 25 basis point cut.
In the first quarter, Southeast Asia’s largest economy grew 5.01 percent from a year earlier, broadly in line with analyst forecasts, though some described the growth rate as disappointing. “Unless BI surprises, we expect the impact of BI policy decision on the Indonesian rupiah to be limited,” Maybank said in a note.