By David Yong Nov. 4 (Bloomberg) -- Asian currencies declined, led by South Korea's won after the nation reported its biggest drop in foreign-exchange reserves since the Asian financial crisis. Korea's currency, the region's worst performer this year, fell after the central bank said today its reserves slumped 11 percent to $212.3 billion in October, the most since the nation received a $57 billion loan from the International Monetary Fund in 1997. Indonesia's rupiah and Malaysia's ringgit tumbled on concern a slowdown in the U.S., the world's largest economy, will damp demand for Asian exports. ``Traders are probably focusing on the decrease in reserves,'' said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. ``Nevertheless, the market has found some stability, which will reduce wild swings in movements.'' The won fell 2.6 percent to 1,296.25 against the dollar as of 12:47 p.m. local time, according to Seoul Money Brokerage Services Ltd. The rupiah slumped 1.3 percent to 11,123 and the ringgit weakened 0.6 percent to 3.5422. Traders are betting the won will still advance 2.1 percent to 1,269.30 per dollar in three months, while a similar contract for rupiah shows the currency is likely to weaken 7.5 percent to 12,020, according to non-deliverable forwards contracts. Forwards are agreements in which assets are bought and sold at current prices for delivery at a specified future date. They are settled in dollars. Nine of the 10 most-traded currencies in Asia outside Japan declined today after reports yesterday showed U.S. manufacturing fell in October at the fastest pace in 26 years, construction spending eased and auto sales at General Motors Corp. slumped 45 percent for the worst month since World War II. Yen Gains The yen advanced against higher-yielding currencies on speculation a series of global interest-rate cuts will make it less attractive to buy overseas assets using funds from Japan. Japan's currency climbed to 65.99 per Australian dollar from 67.04 late yesterday in New York. The yen strengthened to 124.56 against the euro from 125.33, and 156.61 versus the pound from 156.84. It was quoted at 98.90 per U.S. dollar from 99.12. Australia's central bank lowered its benchmark interest rate by three quarters of a percentage point today, the third cut in as many months, on evidence global financial turmoil is buffeting the economy. Malaysia's ringgit fell from near a two-week high before a trade ministry report tomorrow that may show the nation's exports rose in September by the slowest pace in six months. The government will today reduce its growth forecast of 5.3 percent for 2009, Deputy Prime Minister Najib Razak said last month. Curtail Demand ``The financial crisis has started to affect the real sector and that should curtail global demand,'' said Joanna Tan, an economist at Forecast Pte in Singapore. ``Trade is on a weakening trend and we expect further weakness in the ringgit.'' Malaysian export growth slowed to 7.7 percent in September from a year earlier, the least since March, according to the median forecast in a Bloomberg News survey of economists. The U.S. accounted for 11 percent of Malaysia's shipments this year, the most after Singapore. Indonesia expects shipments abroad to slow for a second year in 2009 as demand waned in Japan, the U.S. and Europe, which together account for a third of sales, Trade Minister Mari Pangestu said last month. The Philippine peso dropped 0.6 percent to 48.78 per dollar on concern a global economic slump will reduce overseas demand for the nation's electronics goods and workers. Local electronics parts makers forecast fewer sales as buyers cancel orders, BusinessWorld reported today. ``As the world goes into recession, exports and remittances will contract,'' which means less inflow of dollars and a weaker economy, said Marvin Fausto, who oversees about $6 billion in assets as chief investment officer at Manila-based Banco de Oro Unibank Inc. Elsewhere, the Singapore dollar dropped 1.2 percent to S$1.4855 versus the U.S. currency, the Thai baht declined 0.2 percent to 35 per dollar and China's yuan was little changed at 6.8387. Taiwan's dollar advanced 0.1 percent to NT$32.862. To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

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