South Korea’s won and the Singapore dollar weakened in the first trading day of the year on concern a deepening global recession will hurt exports in the region. The won, Asia’s worst performer last year, fell by the most in two months after a government report showed exports dropped in December and Finance Minister Kang Man Soo said the economy won’t grow in the first half of 2009. Singapore’s currency declined for a third day as the government said the economy may shrink this year by more than previously forecast. The Indian rupee slid after a report yesterday showed exports contracted. “Investors are focused back on the deterioration in growth,” said Goh Puay Yeong, a Singapore-based currency strategist at Barclays Plc, a unit of the U.K.’s third-biggest bank. “Asian currencies are weak today on the back of the poor data.” The won fell 4.9 percent to 1,324.45 per dollar as of 1:02 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency shed 26 percent last year, the worst performance among the 10 most-traded regional currencies outside Japan. Seoul’s financial markets opened one hour later than usual today. The Singapore dollar weakened 1.4 percent to S$1.4526. The currency lost 0.5 percent in 2008, its first loss in three years. The Indian rupee dropped 0.6 percent to 49.0375 today. Flagging Economy “The market may give back what was seen as a distortion in prices last month as this year’s economic prospects weigh on sentiment,” said Jo Hyun Suk, a currency dealer with Korea Exchange Bank. “The won will swing back and forth around 1,300 for the time being.” The won rose 15 percent in December, its biggest monthly advance in a decade, on speculation the authorities supported the currency to boost corporate balance sheets before the year’s end. “Economic conditions in the New Year are likely to worsen,” Kang said in the text of his New Year speech released in Gwacheon on Dec. 31. “It will be difficult to sustain economic growth in the first half of 2009 as domestic demand is in a slump and export growth is slowing significantly.” Bank of Korea Governor Lee Seong Tae also said in a speech to employees on Dec. 31 that the central bank will focus its interest-rate policy on reviving the flagging economy and stabilizing financial markets. Euro Falling Factory production fell by the most on record in November and confidence among the nation’s manufacturers tumbled to the lowest level ever, reports showed this week. The economy will grow 2 percent in 2009, the slowest in 11 years, the central bank said in its yearly outlook last month. The euro fell against the dollar and the yen before a European manufacturing report today that will probably show a recession is deepening in the 16-nation region. The euro declined to $1.3885 in Tokyo from $1.4045 late yesterday in New York. It dropped 4.2 percent last year. The currency also fell to 126.41 yen from 127.41 yen, after sliding 22 percent in 2008. The dollar traded at 91.16 yen from 90.74 yen. It declined 19 percent last year, the most since 1987. Singapore’s currency dropped by the most in two months as the Southeast Asian economy shrank for three straight quarters, joining Japan, Hong Kong and New Zealand in recession. Overvalued The city state’s $161 billion economy declined 2.6 percent last quarter from a year earlier, compared with a revised 0.3 percent drop between July and September. Growth was 1.5 percent in 2008, the slowest in seven years. The government’s latest economic forecast for 2009 ranges from a contraction of 2 percent to expansion of 1 percent, compared with between a decline of 1 percent and growth of 2 percent estimated in November. “Singapore’s dollar is still overvalued in our opinion,” said Tey Tze Ming, a market strategist at Saxo Capital Markets Pte in Singapore. “We are looking for the currency to fall to S$1.53 in three months’ time. Demand for the Singapore dollar will decline due to falling electronics exports and slowing tourist arrivals.” Malaysia’s ringgit fell on signs economic growth will slow as exports slump. Downside Risk The currency declined from a two-week high after Singapore today reduced its gross domestic product forecast. The island- state was Malaysia’s biggest export market last year, based on government data for the first 10 months of 2008. “Singapore’s revision has added to the downside risk in Malaysia’s growth outlook,” said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur. “The ringgit will likely react to the negative sentiment rather than its fundamentals in the short term.” The ringgit dropped 0.6 percent to 3.4730 in Kuala Lumpur, according to data compiled by Bloomberg. The currency reached 3.4525 on Dec. 31, the highest since Dec. 19. The ringgit fell 4.2 percent in 2008, its first annual loss since a fixed exchange rate of 3.8 to the dollar was scrapped in July 2005. The Kuala Lumpur Composite Index of stocks slumped 39 percent and government bonds advanced 8 percent. Non-deliverable forwards show the currency may weaken to 3.4860 in three months. 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. Elsewhere, Vietnam’s dong was at 17,482.00 from 17,485.50 on Dec. 31. Financial markets in China, Taiwan, Thailand, Indonesia and the Philippines were closed for holidays.

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