SEA, India markets struggle with currency depreciation
In India, the government’s decision to remove high-denomination banknotes from circulation as of November 8 in order to combat corruption, black-market trade, and tax evasion hindered market activities since the decision hampered players’ access to sufficient amounts of cash.
Players commented that the government’s decision has put citizens and the economy in a difficult situation since almost all of the market transactions are concluded on cash basis and 86% of the currency in circulation is formed by these high-denomination notes.
Fitch lowered India’s GDP growth forecast to 6.9% from 7.4% and cited temporary disruptions in the economy as the reason behind their action. Meanwhile, the Indian Rupee is down by 2.01% against the US dollar on a monthly basis on December 6.
In the Philippines, the peso depreciated by 0.5% against the US dollar from a month earlier on December 6. A buyer in the country said, “A local producer raised its offers for PP and PE in line with the losses on the currency along with the oil prices.”
A source from a Vietnamese producer informed that they implemented increases on their domestic offers due to the currency depreciation. The Vietnamese Dong retreated by 2.38% on December 6 when compared to November 6.
A buyer in Malaysia stated that they are influenced from the persistent depreciation of the ringgit since they rely on imports for some products. The Malaysian ringgit has depreciated by 5.54% on December 6 on a monthly basis.
This has been the case in Indonesia and Thailand as well. The Indonesian rupiah is now down by 2.97% against the US dollar from a month ago while Thai Baht decreased by 2.2% against the US dollar.
A trader operating in Thailand commented, “Trading activities for polyolefins have been quite limited for the past one month, with buyers refraining from import purchases in the face of the depreciating local currency.”
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