Asian currencies were headed for a weekly decline, led by the Philippine peso and Malaysia’s ringgit, as the worsening European debt crisis reduced demand for emerging-market assets. The MSCI Asia-Pacific Index of shares was poised for its fourth weekly loss as overseas investors sold $1.6 billion more South Korean, Taiwanese and Thai equities than they bought in the first four days of the week. Luxembourg Prime Minister Jean- Claude Juncker said May 26 the International Monetary Fund may not release its portion of aid for Greece next month. “With the European debt problems, which dragged the stock markets lower, Asian currencies also saw downward pressure,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Capital Markets Co. in Tokyo. “But whenever there’s risk-on sentiment, the currencies strengthen as the region’s economic growth is still outpacing other regions.” The peso fell 0.5 percent from a week ago to 43.360 per dollar as of 10:14 a.m. in Manila, according to Tullett Prebon Plc. The ringgit weakened 0.4 percent to 3.0305, the Indonesian rupiah slid 0.3 percent to 8,568 and the Singapore dollar declined 0.2 percent to S$1.2387. Greece’s credit rating was cut three levels by Fitch Ratings on May 20 while Belgium had the outlook on its rating lowered to negative on May 23. A report today may say an index of executive and consumer sentiment in the euro region slid to 105.7 this month from 106.2 in April, according to economists surveyed by Bloomberg. China’s Slowdown Taiwan’s dollar was headed for a 0.1 percent weekly loss as foreign funds trimmed holdings of the island’s stocks on concern a slowdown in China’s economy will hurt demand for exports. The local dollar fell to a one-month low earlier this week after the government reported industrial production grew 6.9 percent in April from a year earlier, the slowest gain since September 2009. The currency rose 0.4 percent today to NT$28.821 per dollar on speculation exporters were repatriating income. A Chinese manufacturing index compiled by HSBC Holdings Plc and Markit Economics fell to its lowest level in 10 months in May, data this week showed. The world’s second biggest economy took around 40 percent of Taiwan’s exports in April, according to official data. “Foreigners’ been selling Taiwan stocks this week on concern China’s economy will cool,” said Henry Lin, a Taipei- based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “Exporters are taking advantage of relatively weaker levels to sell the U.S. dollar.” G-8 Optimism The Bloomberg-JPMorgan Asia Dollar Index rose 0.2 percent today as regional currencies pared weekly losses on speculation Asia’s growth outlook and yield advantage over developed economies will attract funds. Emerging-market economies in Asia will expand 8.4 percent in 2011, compared with 2.4 percent for developed countries, according to International Monetary Fund forecasts in April. First-quarter year-on-year economic growth was 3 percent in Thailand, 4.6 percent in Malaysia, 6.6 percent in Taiwan and 8.3 percent in Singapore, compared with 2.3 percent in the U.S., 2.5 percent in the euro zone and minus 1 percent in Japan. The ringgit rose 0.3 percent today after Group of Eight leaders said the global recovery is gaining traction, paving the way for efforts to cut debt. Interest-Rate Differentials South Korea, Thailand, India, China, Indonesia, the Philippines, Malaysia and Taiwan have raised interest rates this year to help damp inflation, luring funds to local-currency bond market. Benchmark rates in the U.S. and Japan are a maximum 0.25 percent, compared with 7.25 percent in India and 6.75 percent in Indonesia. “Asia is still supported by strong structural, domestic factors as well as favorable interest-rate differentials,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “We expect a continuation of slight strengthening in Asia, subject to occasional risk-off sentiment.” Elsewhere, the Thai baht fell 0.2 percent for the week to 30.36 per dollar, according to data compiled by Bloomberg. South Korea’s won gained 0.1 percent to 1,082 while China’s yuan advanced 0.03 percent to 6.4908. To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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