BLBG: Asian Currencies: Korean Won Leads Declines; Thai Baht Gains
South Korea’s won declined, keeping a gauge of Asian currencies near a four-year low, on concern a deepening world recession will hurt regional exports and spur sales of emerging-market assets by global funds.
Sliding overseas sales led to Japan today reporting its first current-account deficit in 13 years and economists predict Taiwan will later announce a sixth straight drop in shipments for February. The MSCI Asia-Pacific Index of regional stocks fell, extending a four-week run of losses.
“I don’t think anything has materially changed in Asia,” said Dwyfor Evans, a currency strategist with State Street Global Markets in Hong Kong. “There is a continued slump in global trade, China offered little new for the region, capital outflows persist from the region. I would still play emerging Asia on the short side.” A short position would benefit from declines in regional currencies versus the dollar.
The Korean won fell 0.4 percent to 1,556.45 against the greenback as of 12:36 p.m. in Seoul. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, slid 0.1 percent to 101.79. It last week touched 101.08, the lowest since November 2004.
Taiwan’s dollar fell 0.1 percent to NT$34.812, while Thailand’s baht gained 0.2 percent to 36.02. MSCI’s benchmark of regional stocks dropped 1.3 percent, extending this year’s loss to 21 percent.
Japan’s current-account deficit was 172.8 billion yen ($1.76 billion) in January, the Ministry of Finance said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a gap of 15.3 billion yen. The yen traded at 98.16 against the dollar from 98.25 at the end of last week.
Defending Currencies
Asian central banks are abandoning a six-month campaign of defending their currencies, reversing course to cheapen exports. All 10 of the region’s most-active currencies excluding the yen dropped over the past month, with the Korean won sliding 11 percent and Taiwan’s dollar losing 3.2 percent.
Taiwan “is favoring a weaker currency to help exporters,” said Daniel Soh, an economist at Forecast Pte in Singapore. “Taiwan is a very trade-reliant economy and the central bank is also coming to the end of its rate-cutting cycle, so it all rests with the currency now.”
The island will report later today that overseas sales dropped 26 percent in February, after tumbling a record 44 percent in January, according to a Bloomberg News survey of economists. The numbers are due at 4 p.m. local time.
Elsewhere, Singapore’s dollar added 0.1 percent to S$1.5451 against the U.S. currency and the yuan was little changed at 6.8390. The Philippine peso slid 0.1 percent to 48.565. Financial markets in Indonesia and Malaysia are closed for a public holiday.
