Asian currencies fell this week, with Indonesia’s rupiah sliding the most since June 2009, as concern Europe’s debt crisis will worsen led investors to favor safer bets than emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index touched a five- month low on Sept. 15 as global funds pulled more than $2 billion from equities in South Korea, Taiwan and Indonesia since the end of last week. The Asian Development Bank this week cut its 2011 growth forecast for the region excluding Japan to 7.5 percent, from an April estimate of 7.8 percent.
The Asia Dollar Index slumped 0.7 percent this week to 117.56 yesterday, according to data compiled by Bloomberg. The rupiah declined 2.4 percent to 8,800 and South Korea’s won tumbled 3.1 percent to 1,112.10 per dollar, the region’s worst performance. India’s rupee slid 1.5 percent to 47.2650, Malaysia’s ringgit dropped 2.3 percent to 3.08 and Taiwan’s dollar fell 1.2 percent to NT$29.584. Losses for the won, rupee, ringgit and Taiwan dollar were the worst since mid-2010.
“Asian currencies are under downward pressure as the European debt crisis prevails in the market and deters risk- taking,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “There is growing concern about the outlook for exports from Asia given conditions in the U.S. and Europe.”
Economic Risks
India’s industrial production expanded in July at the slowest pace since October 2009 and Philippine exports fell for a third straight month, reports showed this week. Taiwan’s export orders, an indication of shipments in the next one to three months, increased 7.6 percent in August from a year earlier, compared with growth of 11.1 percent in July, according to the median forecast of economists in a Bloomberg survey before official data due on Sept. 20.
South Korean Finance Minister Bahk Jae Wan said at a meeting yesterday that global economic risks are growing. His ministry phoned media outlets including Bloomberg News Sept. 15 to signal possible intervention in the currency market, the first time it’s done so since April 2010.
The won gained 0.4 percent yesterday after the European Central Bank said it will coordinate with the Federal Reserve and international policy makers in lending dollars to euro-area banks to ensure they have enough cash through year-end. U.S. retail sales stagnated in August and manufacturing in the New York region is contracting at the fastest pace since November, data showed this week.
“The international policy makers’ pledge to lend dollars to euro-zone banks helped calm investor sentiment,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Still, it’s not a fundamental solution, and will only support markets for the short term.”
Intervention
Bank Indonesia intervened in the rupiah and bond markets, Deputy Governor Hartadi Sarwono said on Sept. 14, when the currency declined as much as 2.6 percent and reached 8,939, the weakest level since February.
“Talk of a possible Greek default and the country exiting from the euro region” deterred risk-taking, said Wiwig Santoso, head of treasury and markets at PT Bank DBS Indonesia in Jakarta. “There are concerns of a global economic slowdown, and the rupiah isn’t isolated from market developments.”
Elsewhere, Thailand’s baht fell 1 percent this week to 30.37 per dollar and the Philippine peso dropped 1.9 percent to 43.26. China’s yuan strengthened 0.08 percent to 6.3834.
--Judy Chen. With assistance from Jiyeun Lee in Seoul and Khalid Qayum in Singapore. Editors: James Regan, Ven Ram
To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
