BLBG:Asian Currencies Weaken as Europe Debt Crisis Concern Deters Risk-Taking
Asian currencies weakened, led by Indonesia’s rupiah and the Philippine peso, as concern Europe’s debt crisis will worsen damped demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY) fell for a second day after UniCredit SpA, Italy’s biggest bank, said it will sell shares at a 43 percent discount to the Jan. 3 closing price to raise capital. Greek Prime Minister Lucas Papademos said yesterday the economy could collapse as early as March if the country doesn’t accept income cuts needed to secure more international aid. The MSCI Asia Pacific (MXAP) Index of shares lost 0.4 percent.
“Europe’s debt concern reverses the risk-on mood and makes the dollar stronger,” said Norawit Suparinayok, a foreign- exchange trader at Bangkok Bank Pcl. “Asian currencies may be weaker against the dollar.”
The rupiah fell for a fourth day, slipping 0.3 percent to 9,166 per dollar as of 9:49 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The peso dropped 0.4 percent to 43.925, while Thailand’s baht weakened 0.2 percent 31.54.
France plans to sell as much as 8 billion euros ($10.3 billion) of debt today as credit-rating companies threaten to cut the nation’s AAA rating. Fitch Ratings cut the country’s credit outlook on Dec. 16 on the “heightened risk of contingent liabilities” from the euro-region crisis. Standard & Poor’s placed the ratings of 15 euro nations, including France and Germany, on review for possible downgrades on Dec. 5.
Yuan Reference Rate
Speculation that Bank Indonesia will cut borrowing costs at a review on Jan. 12 may weigh on the rupiah, according to PT Bank UOB Indonesia. Consumer prices in the country rose 3.79 percent in December from a year earlier after increasing 4.15 percent in November, government data showed on Jan. 2.
“With inflation declining, a 25-basis point cut in the interest rate is possible,” said Bambang Eko Joewono, the Jakarta-based head of the global-markets division at Bank UOB.
The yuan dropped after the central bank lowered its daily reference rate by the most since November amid concern the European debt crisis will cool demand for Chinese goods.
The People’s Bank of China set the fixing 0.18 percent weaker, the biggest reduction since Nov. 15, at 6.3115 per dollar. Global economic growth prospects are dim and downside risks are escalating, Zhu Min, deputy managing director at the International Monetary Fund, said in Singapore today.
“The lingering European debt crisis will harm China’s exports and the central bank is taking account of this,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd.
The yuan fell 0.11 percent to 6.3013. The currency is allowed to trade 0.5 percent on either side of the daily fixing.
Elsewhere, South Korea’s won and Malaysia’s ringgit weakened 0.1 percent to 1,149.60 and 3.1411, respectively. The Taiwan dollar was little changed at NT$30.280 and the Singapore dollar at S$1.2875.
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net Yumi Teso in Bangkok at yteso1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
