Asian currencies headed for their biggest weekly drop since 1998 on slowing global economic growth, prompting some central banks in the region to intervene to stem declines. The Bloomberg-JPMorgan Asia Dollar Index touched its lowest level in 10 months yesterday after the Federal Reserve said there are “significant downside risks” to the U.S. economy and a Chinese purchasing managers’ index showed export orders and output declined. South Korea’s finance ministry said today it will “take action” to stabilize the currency market as the won headed for its biggest weekly loss since February 2009. The rupiah gained as much as 2 percent today after Bank Indonesia said yesterday it will remain in the market. The won slumped 6.8 percent from a week ago to 1,193.15 per dollar as of 11:58 a.m. in Seoul, according to data compiled by Bloomberg. India’s rupee plunged 4.7 percent to 49.605, Taiwan’s dollar dropped 3.5 percent to NT$30.645, the biggest drop since January 1998, and Malaysia’s ringgit declined 3.1 percent to 3.1775. “Concern about slowing global growth is intensifying and investors are increasingly becoming risk averse,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok. “This is hurting the export outlook for the region, weighing on regional currencies. Some of the central banks may be in the market, but downward pressure remains quite strong.” Global funds sold $1.4 billion more Indonesian, South Korean and Taiwanese equities than they bought this week through yesterday, according to exchange data. The International Monetary Fund lowered its forecast for 2011 global economic growth this week to 4 percent from 4.3 percent, and for 2012 to 4 percent from 4.5 percent, predicting a “severe” fallout if Europe fails to contain its debt crisis. ‘Willing to Intervene’ The won weakened to a one-year low as demand for the relative safety of the dollar increased. “The won is falling on concerns the U.S. growth slowdown and Europe’s debt woes will worsen dollar liquidity in the market,” said Sam Hong, senior vice president in charge of currency strategy at Shinhan Bank in Seoul. “There seems to be fear among investors, making reactions excessive.” South Korea will expand monitoring of overseas investment trends in the country and capital outflows amid rising financial market volatility caused by the European fiscal crisis, the Financial Supervisory Service said today. “If there’s excessive movement in the exchange rate, the Korean government is willing to intervene to mitigate the pace,” Finance Minister Bahk Jae Wan said yesterday. Rupiah Pares Loss The rupiah climbed the most since May 2010 today, paring a weekly loss, on speculation the central bank is intervening to curb volatility. The currency reached 9,365 yesterday, the weakest level in 16 months, as foreign funds sold stocks and bonds. The rupiah added 1.1 percent to 9,004 today, trimming its weekly loss to 2.3 percent. Bank Indonesia will maintain the rupiah’s movements in line with regional currencies, Hendar, the central bank’s director of monetary policy who goes by only one name, said yesterday. The country’s economic fundamentals remain solid, he added. “There was some intervention by the central bank,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta. “They will try to make the currency not too volatile.” Ringgit Drops The ringgit was headed for its biggest weekly decline in 16 months after stocks and commodities tumbled. The currency traded near its weakest level since July 2010 after reports this week showed Americans filed more jobless claims than economists predicted and manufacturing in China as well as Europe contracted. Suspected market intervention around the region is stemming losses for Asian currencies, according to Bank of Tokyo-Mitsubishi UFJ Bhd. “Economic data is not supportive of the market, so we can expect more ringgit weakness next week,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi in Kuala Lumpur. “Central banks in the region don’t want to see such a rapid depreciation.” Elsewhere, the Philippine peso dropped 1.4 percent from a week ago to 43.88 per dollar. Thailand’s baht declined 1.4 percent to 30.79 and China’s yuan fell 0.15 percent to 6.3929. 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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