Asian currencies fell from a 14-year high and stocks slumped as the threat of a U.S. debt default damped demand for emerging-market assets. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies, dropped after U.S. Treasury Secretary Timothy F. Geithner said yesterday he hoped lawmakers can agree to a new debt limit before an Aug. 2 deadline. The South Korean won declined from a three-year high on speculation importers were taking advantage of recent gains to settle bills. “Given that Asian currencies have appreciated a fair bit and because of the debt overhang issue in the U.S., investors will continue to be cautious,” said Puay Yeong Goh, a currency strategist at Credit Suisse Group AG. in Singapore. “The trade on Asian currencies will continue to be defensive.” The Asia Dollar Index dropped 0.1 percent to 119.71. The won weakened 0.4 percent to 1,056.26 per dollar at the 3 p.m. close in Seoul and Malaysia’s ringgit fell 0.1 percent to 2.9733, according to data compiled by Bloomberg. President Barack Obama and House Speaker John Boehner are in a stalemate over how to increase the debt ceiling, a step needed for the U.S. to keep servicing its borrowings. Geithner said two types of plans are being discussed: One is a “comprehensive, balanced” plan including spending cuts and “tax reform that would generate revenue.” The other would put in place “some upfront savings, but then establish a special committee with exceptional powers that could legislate quickly,” he said. The MSCI Asia-Pacific Index of regional shares slid 0.9 percent, the most in almost two weeks. Korean Intervention Speculation The won snapped a four-day gain amid speculation policy makers will intervene to stem appreciation that poses a risk to exports. “There is steady dollar demand from importers such as oil refineries,” said Roh Sang Chil, chief currency dealer with Kookmin Bank in Seoul, the nation’s biggest lender. “The market is also finding it difficult to break the 1,050 level amid a perception that the authorities may not feel comfortable with the pace of gains in the currency.” The ringgit fell from a 12-week high as Malaysia’s benchmark stock index declined 0.4 percent. “There’s a lot of haggling and feet-dragging on the U.S. debt issue and uncertainty will prevail for a while,” said D. Sivadass, foreign-exchange forwards trader at Hong Leong Bank Bhd. in Kuala Lumpur. “With stocks mostly down, risk appetite will be affected.” Elsewhere, China’s yuan was little changed at 6.4450 per dollar, while the Philippine peso was at 42.405 compared with 42.403 late last week. Thailand’s baht rose 0.1 percent to 29.78 and Indonesia’s rupiah climbed 0.1 percent to 8,523. Taiwan’s dollar fell 0.1 percent to NT$28.859 and the Indian rupee dropped 0.1 percent to 44.4075. 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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