Asian currencies have fallen across the board so far in May with the Malaysian Ringgit being the worst performer and the Philippine Peso the sole gainer as at Friday (20 May) close, thanks to the rising US rate hike speculation. (See the chart below)
The US dollar has moved more to the bull side as speculators have increasingly started pricing in a June rate hike by the Federal Reserve.
Data from Commodity Futures Trading Commission showed that the value of net dollar short positions has fallen to $4.19bn in the week ended on 17 May from $6.19bn a week ago.
Earlier this week, the Fed minutes hinted at the possibility of another rate hike if economic data keep coming supportive. Latest retail sales data was one such set of numbers that boosted hawkish expectations in the world's largest economy.
A Reuters article mentioned the CME group's FedWatch tool which showed the Fed funds futures moved to price in a 26% chance of a June rate hike as on Friday from 19% two days ago.
The Philippine currency had a sharp fall against the dollar in April unlike other currencies of the region which probably averted a fall this month. The peso travelled a bumpy road against the greenback and stays 0.5% higher in May against the US unit as on Friday.
The Malaysian currency has been dragged by weakening growth prospects which did not get any stimulus from the 19 May policy decision, which was the first one by the new chief of Bank Negara Malaysia, Muhammad Ibrahim.
The BNM kept the rate at 3.25% and analysts expect the central bank to ease the monetary policy next quarter. The currency has fallen more than 4% so far this month against the dollar.
All the other emerging market currencies from the region have also fallen during the same period with the Korean won down 3.54%, the Indonesian rupiah down 3.12%, Singapore dollar falling 2.7%, Thai baht 2.3%, Indian rupee 1.5% and the Chinese yuan down 1.13%.