Asian currencies halted a three-week rally as signs the world’s biggest economy is slowing tempered demand for emerging-market assets and raised concern about the outlook for exports. Federal Reserve Chairman Ben S. Bernanke said this week the U.S. economic recovery was “frustratingly slow” and offered no hints on a new stimulus program. The Fed has pumped cash into the banking system to stimulate growth and kept interest rates near zero, prompting investors to search for higher yields in developing markets. The Bloomberg-JPMorgan Asia Dollar Index dropped 0.2 percent this week as overseas investors turned net sellers of about $1.1 billion of equities in Thailand, South Korea, Indonesia, Taiwan and India. “Investors have kept away from risky assets including Asian currencies,” said Tetsuo Yoshikoshi, a Singapore-based senior economist at Sumitomo Mitsui Banking Corp. “Investors have been cautious this week on prospects of the global economy slowing.” The South Korean won fell 0.1 percent this week to 1,080.85 per dollar as of 12:48 p.m. in Seoul, according to data compiled by Bloomberg. Thailand’s baht lost 0.2 percent to 30.39 and Malaysia’s ringgit weakened 0.1 percent to 3.0155. Indonesia’s rupiah and Taiwan’s dollar were little changed at 8,522 and NT$28.739, respectively. The MSCI Asia-Pacific Index of regional stocks headed for a sixth weekly loss after Fed Vice Chairman Janet Yellen said yesterday the U.S. housing market will witness a “long drawn- out recovery.” A Labor Department report on June 3 showed U.S. employers hired the least workers in May in eight months. ‘Risk Aversion’ Global funds sold $602 million more equities in Thailand than they bought this month through yesterday, exchange data showed. Risk aversion and concerns about the nation’s political scene have triggered fund outflows, Bank of Thailand Governor Prasarn Trairatvorakul said yesterday. The nation will hold national elections on July 3. “Amid risk aversion caused by concern about the U.S. recovery and uncertainty surrounding the Thai polls, foreign investors have been selling local stocks,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “That is putting downward pressure on the baht.” South Korea’s central bank Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3.25 percent from 3 percent today, the third increase this year, according to a statement. Eight of 17 economists surveyed by Bloomberg News predicted the decision, with the rest having forecast no change. Monetary Tightening Borrowing costs in Malaysia will rise at least another 25 basis points, or 0.25 percentage point, by the end of the year, according to the median estimate of 13 economists surveyed by Bloomberg. Malaysia’s central bank raised the overnight policy rate to 3 percent on May 5. “People are also thinking of more monetary tightening to come in the region, which will slow the economies,” according to Sumitomo Mitsui’s Yoshikoshi. “They will now have a closer look at Malaysia and Thailand.” Elsewhere this week, the Philippine peso declined 0.1 percent to 43.257 per dollar. Singapore’s dollar gained 0.3 percent to S$1.2292 and India’s rupee climbed 0.3 percent to 44.687. China’s yuan was little changed at 6.4785. To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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