Asian currencies had their first weekly loss in two months after U.S. Treasury Secretary Timothy F. Geithner signaled his government supports a stronger dollar as officials from the Group of 20 nations met in South Korea. Malaysia’s ringgit, Thailand’s baht and the Singapore dollar retreated from last week’s highest levels in at least 13 years. Bank of Thailand Governor Prasarn Trairatvorakul said on Oct. 21 the central bank is studying steps to curb excessive volatility in the baht. South Korea’s Vice Finance Minister Yim Jong Yong said his government is discussing several measures to control capital inflows. G-20 finance officials will pledge today to avoid competitive devaluations and endorse market-based exchange rates in a fresh effort to defuse trade tensions before they hurt the world economy. The policy makers are struggling to rally around a U.S. proposal to set targets for current-account gaps as a way of rebalancing global growth and realigning exchange rates. “It’s really about the G-20 as the big theme is the focus on currency wars,” said Charles Han, Hong Kong-based head of foreign-exchange trading at Newedge Financial HK Ltd. “It’s such a mixed bag and a lot of issues need to be addressed. Ahead of that, we will probably see some risk aversion and a stronger dollar as people stay sidelined.” South Korea’s won slumped 1 percent this week to 1,123.35 per dollar in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit declined 1 percent to 3.1170 and Taiwan’s dollar weakened 0.4 percent to NT$30.910. Singapore’s currency dropped 0.5 percent to S$1.3032. Make Commitments G-20 finance ministers and central bankers will make the commitments to avoid competitive devaluations and support market exchange rates in a statement after talks end today in Gyeongju, a G-20 official said on condition of anonymity. The group agreed for now to pursue policies to reduce imbalances and asked the International Monetary Fund to study the impact of exchange rates and the persistence of some trade gaps, the person said. Nations from Brazil to China are trying to limit gains in their currencies through market intervention or capital controls as investors seek higher-yielding emerging-market assets amid near-zero U.S. borrowing costs. Capital flooding into Asia may fuel exchange-rate volatility, asset bubbles and financial instability, IMF head Dominique Strauss-Kahn said Oct. 18. Japanese Finance Minister Yoshihiko Noda said in Seoul yesterday that competitive devaluation is negative for the global economy. Geithner told Brazil’s Finance Minister Guido Mantega on Oct. 21 that the U.S. won’t allow the dollar to weaken, Mantega said. Practical Results “The G-20 needs to balance out all those issues,” Newedge’s Han said. “But it all boils down to practicality. Markets will be looking for practical results that can be implemented.” The won posted its first weekly loss in two months as authorities signaled they will take tougher measures to curb capital inflows. The government may reveal a round of measures to ease volatility in capital inflows and outflows as early as late November, the Maeil Business Newspaper reported yesterday, citing a government official it didn’t identify. “Regulations are coming up,” said Ko Yun Jin, a currency trader at Kookmin Bank in Seoul. “Over the weekend we have the meeting of finance ministers. We want to see what they may come up with. There’s a bit of caution.” China’s yuan declined for the first week since early September after the central bank increased interest rates for the first time since 2007. Gross domestic product advanced 9.6 percent in the third quarter from a year earlier, the statistics bureau said on Oct. 21, the slowest pace in a year. The central bank on Oct. 19 lifted its benchmark one-year lending and deposit rates by a quarter of a percentage point to 5.56 percent and 2.5 percent respectively. The yuan dropped 0.2 percent this week to 6.6572 per dollar. Elsewhere, Indonesia’s rupiah declined 0.3 percent to 8,937 and the Philippines peso fell 0.3 percent to 43.305. India’s rupee slumped 1 percent for the week to 44.56 and the Thai baht slipped 0.4 percent to 29.94. To contact the reporter on this story: Patricia Lui at plui4@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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