BLBG:Asian Currencies Drop This Week as Europe Debt Crisis Starts to Hit Growth
India’s rupee and South Korea’s won led a decline among Asian currencies this week on signs the European debt crisis is starting to hit regional economic growth.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.7 percent and the MSCI (MXAP) Asia-Pacific Index of stocks dropped 2.5 percent on concern euro-area leaders will fail to agree on a new package aimed at stemming the crisis and boosting confidence in financial markets. Malaysia reported today that export growth slowed in October, while Japanese data showed the economy expanded less than the initial estimate last quarter.
“We are seeing the risk-off mood and emerging-market currencies are under pressure,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. “There’s concern about a global slowdown.”
India’s rupee declined 2.1 percent this week to 52.2763 per dollar as of 9:27 a.m. in Mumbai and South Korea’s won weakened 1.4 percent to 1,147.80 in Seoul, according to data compiled by Bloomberg. The Malaysian ringgit dropped 1.2 percent to 3.1580, while the Indonesian rupiah fell 0.5 percent to 9,098.
Other reports this week showed Thailand’s consumer confidence slumped to a decade-low and Taiwan’s exports grew the least in more than two years.
Malaysia Exports
Malaysia’s overseas sales increased 15.8 percent in October from a year earlier, after rising 16.6 percent in September, the government reported. That was more than the 7.3 percent median estimate of economists surveyed by Bloomberg. The Philippines may report on Dec. 13 that exports fell 16.9 percent in October, after dropping 27 percent in September, a separate survey showed.
Japan’s economy expanded at an annualized rate of 5.6 percent in the three months ended Sept. 30, the Cabinet Office said in Tokyo today, compared with a preliminary figure of 6 percent. An index measuring consumer sentiment in Thailand slipped to 61 last month, the least since September 2001, the University of the Thai Chamber of Commerce said yesterday.
European Central Bank President Mario Draghi has damped speculation the bank will buy more government bonds to help halt rising yields. European Union leaders began a two-day summit on the crisis in Brussels yesterday.
“All eyes have been on the euro zone because that will determine the capital flows into emerging markets,” said Radhika Rao, an economist at Forecast Pte in Singapore.
China’s yuan declined this week on speculation policy makers will slow currency appreciation after inflation cooled to the least in 14 months. Consumer prices rose 4.2 percent in November from a year earlier after increasing 5.5 percent the prior month, the National Bureau of Statistics said today.
Yuan Depreciation
Risks of yuan depreciation are rising in the short term, triggered by “large-scale” capital outflows, Zhang Monan, a researcher at the State Information Center, wrote in a commentary in the China Securities Journal today.
The yuan fell 0.06 percent to 6.3636 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The People’s Bank of China set the daily reference rate 0.05 percent lower at 6.3352, the weakest level since Dec. 1. The currency is allowed to fluctuate as much as 0.5 percent on either side of the fixing.
“Easing inflation implies there’ll be less room for yuan appreciation,” said Edmond Law, deputy head of foreign exchange at BWC Capital Markets in Hong Kong. “Officials will now shift their focus to protecting economic growth amid the increasingly uncertain global outlook. The inflation data confirms further monetary easing is likely.”
Elsewhere this week, the Philippine peso weakened 0.7 percent to 43.573 per dollar and Taiwan’s currency fell 0.2 percent to NT$30.218. Singapore’s dollar dropped 1.2 percent to S$1.2995.
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
