Most emerging Asian currencies drifted lower on Wednesday, tracking weaker regional equities, while minor declines in oil prices in early trade checked risk appetites. Asian shares slumped after Wall Street was knocked hard in the wake of a delay to a U.S. healthcare reform vote. The benchmark S&P 500 posted its biggest one-day drop in about six weeks and closed at its lowest point since May 31 after Senate Republican leader Mitch McConnell decided to put off a planned vote on a bill to dismantle the Affordable Care Act until after the Senate’s July 4 recess.
“The delay in Senate vote has rekindled concerns over Trump administration’s ability to deliver its economic agenda, as the delay might push back the timeline for eagerly-awaited tax reforms,” Mizuho Bank said in a note to clients. The healthcare legislation, which has encountered resistance from several Republicans, is the first plank of Trump’s domestic policy agenda, with investors eager for him to move onto his other business-friendly plans including tax cuts, infrastructure spending and deregulation.
Risk sentiment was also undermined by oil markets, which were flat to lower after a report of rising U.S. fuel and crude inventories underscored concerns that a three-year supply glut is far from over. The Korean won was among the big decliners in Asia, shedding as much as 0.6 percent to touch a one-week low.
Meanwhile, the Singapore dollar edged up, remaining on track to rise against its U.S. counterpart for a second day. Singapore’s central bank will streamline regulatory requirements to allow banks to conduct or invest in non-financial e-commerce businesses, it said late on Tuesday.
The Philippine peso fell as much as 0.4 percent to 50.505 on Wednesday , its weakest level in nearly eleven years. The Philippines’ Bureau of the Treasury said on Tuesday it plans to raise as much as 195 billion pesos from the local debt market in the third quarter, 27 percent more than the amount it raised in the current quarter. The currency has been among the worst performers in the region this year, weakening more than one percent against the dollar. The non-deliverable outright market expects the currency to depreciate to 51.500 against the dollar in a year.
The Chinese yuan edged up as much as 0.3 percent on to hit a nearly two-week high. Prior to market opening, the People’s Bank of China (PBOC) set the yuan midpoint at 6.8053 per dollar, lifting it 239 pips from Tuesday’s fixing to the strongest level since June 19. Gains in the yuan were supported by Chinese state-owned banks, as happened on Tuesday afternoon, traders said. Moreover, a private survey showed China’s economy continued to improve in the second quarter, with corporate profits rising and hiring up. “Over the remainder of the year, we believe the nation (China) will manage to avert any intense market worries over the yuan’s depreciation before the 19th Party Congress in the autumn,” said Qi Gao, FX strategist at Scotiabank.