Asian currencies weakened, led by Indonesia’s rupiah, as investors cut their holdings of emerging- market assets on concern Europe’s sovereign-debt crisis will slow global economic growth, hurting the region’s exports. The Bloomberg-JPMorgan Asia Dollar Index dropped by the most in a week after European policy makers failed to introduce a plan to stem the region’s debt crisis. Finance chiefs from the euro region said last week the situation leaves no room for tax cuts or extra spending to spur their economies. Global funds sold $1.6 billion more South Korean, Taiwanese and Indonesian stocks than they bought last week, exchange data show. The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, declined 0.4 percent to 117.18 as of 10:15 a.m. in Hong Kong. The rupiah and Malaysia’s ringgit slumped 0.8 percent to 8,873 and 3.1033, respectively, according to data compiled by Bloomberg. South Korea’s won weakened 0.5 percent to 1,117.93. “When investors don’t have confidence in the European situation, they try to hold U.S. dollars and try not to expose themselves to riskier assets,” said Amonthep Chawla, a Bangkok- based market analyst at Kasikornbank Pcl. “Investors are waiting for policies that would help to rescue European countries.” Indonesia is preparing a stimulus package that it may implement in the first half of 2012 should the global economy deteriorate and hurt growth, the government said Sept. 15. The risks to growth have increased as the economic problems in Europe and the U.S. have worsened, Bank of Thailand Governor Prasarn Trairatvorakul said the same day. Fund Outflows The rupiah traded near a seven-month low as the MSCI Asia- Pacific Excluding Japan Index of stocks snapped a two-day advance. Overseas investors cut their holdings of Indonesian government bonds by 2.1 percent to 245.92 trillion rupiah ($27.7 billion) in the first three days of last week, debt management office data show. Foreign funds sold $411 million more local shares than they bought last week, according to exchange data. “The market is cautious on what is going to happen in the euro zone,” said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp. in Singapore. “That is keeping Asian currencies under pressure including the rupiah. Bank Indonesia has been active to smooth the flows in the currency.” The ringgit traded near the lowest level this year as European Union and International Monetary Fund officials assess whether Greece’s budget measures would qualify the nation for another tranche of bailout aid. Take Steps “The market is scared of the contagion risk, not just the Greece situation alone,” said Ahmad Zubaidi Samse, a foreign- exchange trader at Bank Muamalat Malaysia Bhd. in Kuala Lumpur. “The ringgit is reflecting that sentiment.” The won weakened to a six-month low. The authorities will take steps to stabilize the currency market if it spots “herd- behavior,” the finance ministry said in a report to parliament today. The won should reflect economic fundamentals and market supply and demand, it said. “Uncertainties regarding Europe’s debt crisis make it difficult to take a strong one-sided bet,” said Kim Seong Soo, a Seoul-based currency trader with Kyongnam Bank. Taiwan’s dollar fell 0.3 percent to NT$29.673 per dollar before a report tomorrow that economists surveyed by Bloomberg predict will show growth in export orders, an indication of shipments in the next one to three months, slowed to 7.6 percent in August from a year earlier compared with 11.1 percent the previous month. Elsewhere, the Philippine peso weakened 0.3 percent to 43.417 per dollar and Thailand’s baht declined 0.3 percent to 30.46. China’s yuan dropped 0.03 percent to 6.3850. 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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