Asian currencies dropped, led by Malaysia’s ringgit and the Philippine peso, as signs the global economic recovery is losing traction dimmed the outlook for regional exports and damped demand for emerging-market assets. The Bloomberg-JPMorgan Asia Dollar Index retreated from a 14-year high after a U.S. government report on July 8 showed payrolls increased by 18,000 in June, less than the most pessimistic forecast in a Bloomberg News survey of economists. China’s economy grew the least in almost two years last quarter, a Bloomberg survey showed before the July 13 release of the data. The U.S. and China are the world’s biggest economies. “The outlook for Asian currencies isn’t that positive today,” said Nick Verdi, a foreign-exchange strategist at Barclays Capital in Singapore. “The negative international factors are superseding some of the more positive domestic determinants in the region.” The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, fell 0.1 percent as of 4:47 p.m. in Hong Kong, having ended last week at the highest level since August 2008. The ringgit declined 0.5 percent to 3.0100 per dollar, according to data compiled by Bloomberg. The Philippine peso slid 0.4 percent to 42.912 and Thailand’s baht lost 0.3 percent to 30.32. China’s economic growth slowed to 9.3 percent in the second quarter from 9.7 percent in the first, according to the median estimate in a Bloomberg survey before the data is released on July 13. Malaysia’s industrial output fell 5.1 percent from a year earlier in May following a 1.7 percent decline in April, according to government data released today. Rate Pause The ringgit was headed for its biggest loss in two weeks following the production figures. Bank Negara unexpectedly refrained from raising its overnight policy rate on July 7, citing higher downside risks to growth. Malaysian police detained 1,697 people on July 9 as demonstrators rallied against what they call unfair voting practices in the biggest protest since 2007. “Concern over the global slowdown and a pause in Malaysian interest-rate rises contributed to the weakening of the ringgit,” said Yeo Chin Tiong, head of financial markets at Alliance Bank Bhd. in Kuala Lumpur. “There’s no impact from the street protest over the weekend.” ‘Risk-Off Again’ The peso snapped a nine-day rally as the Philippine Stock Exchange Index fell 0.4 percent. “It’s risk-off again after data showed weakness in some major economies,” said Lito Mercado, head of trading at Rizal Commercial Banking Corp. in Manila. “We’re also seeing some mild correction in the peso after the rally.” Thailand’s baht fell, retreating from a one-month high, on concern the central bank will intervene to slow appreciation that threatens export growth. “Intervention is more likely now that there is concern about external demand on data from China and the U.S.,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “A sharp gain in the baht is not desirable.” Data from the Bank of Thailand released on July 8 showed foreign-exchange reserves rose 0.3 percent in the week ended July 1 to $184.90 billion, the first gain in four weeks. ‘Bit Skittish’ The won retreated from a three-year high, prompting Finance Minister Bahk Jae Wan to say at a forum in Seoul today that the government may take pre-emptive action against sudden changes in capital flows if needed, while strengthening monitoring of financial markets. Policy makers will use “smoothing operations” to counter “herd behavior” in the currency market, he said. “The market turned a bit skittish after the U.S. job market proved quite bad,” said Kim Sung Soon, a Seoul-based currency trader with state-run Industrial Bank of Korea. “After last week’s good run, the won also needs to take some respite before breaking through the psychological 1,050 level.” The won fell 0.1 percent to 1,058 per dollar, according to data compiled by Bloomberg. Elsewhere, the Singapore dollar slid 0.2 percent to S$1.2222 and Indonesia’s rupiah fell 0.1 percent to 8,529. China’s yuan was little changed at 6.4671. To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Chien Mi Wong in Singapore at cwong303@bloomberg.net. To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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