Asian currencies dropped for a fourth week, led by South Korea’s won and India’s rupee, as Europe’s debt crisis showed no signs of easing, prompting investors to favor safer assets including the dollar.
The Bloomberg-JPMorgan Asian Dollar Index (MXAP) dropped 0.2 percent today after German Chancellor Angela Merkel yesterday ruled out joint euro-area borrowing and an expanded role for the European Central Bank to fight the debt crisis. Germany failed to sell all of the bunds offered at an auction on Nov. 23. Taiwan cut its growth forecasts yesterday for this year and next, while the Reserve Bank of India announced measures to boost the supply of dollars.
“Merkel’s comment confirmed investors’ concerns that there is no short-term solution to the European debt crisis,” said Kim Doo Hyun, a senior currency dealer at Korea Exchange Bank in Seoul.
The won slid 1.9 percent this week to 1,160.65 per dollar as of 12:19 a.m. in Seoul, the biggest decline in two months, according to data compiled by Bloomberg. The rupee weakened 1.4 percent to 52.0737 and the Philippine peso dropped 1 percent to 43.813. The Asian Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, fell 0.8 percent this week as the MSCI Asia-Pacific Index of shares lost 4.3 percent.
Investors withdrew $2.7 billion from emerging-market equity funds in the week through Nov. 23, Citigroup Inc. said in a research note today, citing EPFR Global data, which earlier said $32 billion flowed out in the year to Nov. 16. EPFR also said outflows from developing-nation bond funds were $205 million, according to Barclays Capital.
Korean Trade Data
The won headed for a fourth weekly loss before trade figures due next week that are expected to show export growth in November stayed near a two-year low of 8 percent reported for October. Shipments rose 10.4 percent from a year earlier, based on the median estimate in a Bloomberg survey of economists. Growth in industrial output eased to 5 percent in October from 6.8 percent, a separate survey showed before a Nov. 30 report.
The rupee has lost 6.5 percent this month, prompting the central bank to yesterday loosen rules for companies to borrow abroad and sell foreign currencies through swaps, and to raise interest rates on bank deposits for Indians living overseas.
Malaysia’s ringgit fell 0.9 percent this week to 3.1898 per dollar, touching a seven-week low of 3.2000 yesterday. The currency’s three-month implied volatility, a measure of foreign- exchange swings used to price options, reached a two-week high of 12.20 percent on Nov. 22, suggesting further losses. Gross domestic product rose 5.8 percent in the third quarter from a year earlier, from 4.3 percent in the preceding three months, data show.
‘Risk Aversion’
“The European situation has sparked risk aversion,” said Enrico Tanuwidjaja, a currency strategist at Malayan Banking Bhd. in Singapore. “Domestically there is nothing worrying. Global developments play a more crucial role in explaining the weakening of the ringgit and high volatility.”
Taiwan’s dollar headed for the worst weekly performance in two months after the statistics bureau said yesterday the economy will expand 4.51 percent this year and 4.19 percent in 2012, compared with previous predictions of 4.56 percent and 4.38 percent, respectively. The currency dropped 0.8 percent in the past five days to NT$30.499.
Elsewhere, Thailand’s baht slid 0.7 percent this week to 31.22 per dollar. Indonesia’s rupiah dropped 0.7 percent to 9,088 and China’s yuan lost 0.2 percent to 6.3693.
To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net;
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net
