BLBG:Won, Rupiah Lead Declines in Asian Currencies on Regional Growth Concern
South Korea’s won and Indonesia’s rupiah led declines in Asian currencies as data this week showed economic growth is slowing in most of the region’s economies.
Korean exports dropped for the first time in two years, Thai overseas sales fell in December and Taiwan’s economy expanded at the slowest pace since 2009 last quarter. A Chinese purchasing managers’ index released today unexpectedly rose in January, fueling gains in the yuan and Taiwan’s dollar. Thailand and Indonesia cut borrowing costs last quarter, while India reduced bank’s reserve requirements last week.
“Growth is slowing down at different degrees” in Asia except China, said Chia Woon Khien, the Singapore-based head of currency and rates strategy for Asia excluding Japan at Royal Bank of Scotland Group Plc. In “countries like India and Indonesia, monetary policy has started to ease and more easing will come and that over time will undermine their currencies,” she said.
The rupiah weakened 0.3 percent to 9,022 per dollar as of 9:43 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The won declined 0.3 percent to 1,126.35, Thailand’s baht fell 0.3 percent to 31.01 and India’s rupee dropped 0.3 percent to 49.5938.
Indonesian exports rose 3.5 percent in December from a year earlier, compared with an 8.3 percent gain the previous month, according to the median forecast in a Bloomberg News survey, before official data due at 11 a.m. local time today. That would be the smallest increase since September 2009.
Korean Inflation Cools
The export data “is a reminder that Indonesia isn’t isolated from what’s going on in the world,” said Gundy Cahyadi, a Singapore-based economist at Oversea-Chinese Banking Corp. “The European crisis is putting pressure on the currencies.”
The won declined to a one-week low as data showed inflation cooled, damping speculation policy makers will allow appreciation to curb price gains. Consumer prices rose 3.4 percent in January from a year earlier, compared with 4.2 percent the month before. Exports (KOEXTOTY) shrank 6.6 percent from a year earlier in January, the first decline since October 2009.
“Some investors have been betting the government will allow currency gains to stem inflation, but today’s figures may make them reconsider,” said Kim Doo Hyun, a Seoul-based senior currency trader at Korea Exchange Bank.
The baht dropped the most in a week after overseas sales fell 2.1 percent from a year earlier following a 13.1 percent decline in November, central bank data show. The currency retreated from a seven-week high as a report today showed inflation slowed to 3.4 percent in January, the least since March 2011.
Yuan Rises
“The Thai economic picture isn’t that good at this moment,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “We may see fewer exporters willing to sell the dollar, while importers may rush to buy the dollar.”
China’s yuan gained 0.06 percent to 6.3045 per dollar after a report showed the nation’s manufacturing expanded last month on increased new orders. The purchasing managers’ index rose to 50.5 from 50.3 in December, more than the median estimate of 49.6 in a Bloomberg News survey of economists. Fifty is the dividing line between contraction and expansion.
“Investor confidence got a boost by better-than-expected PMI,” said Edmond Law, deputy head of foreign currency at BWC Capital Markets in Hong Kong. “It implies China’s economic slowdown isn’t as bad as what people expected.”
Elsewhere, Taiwan’s dollar advanced 0.1 percent to NT$29.605 and the Philippine peso was little changed at 42.860. Financial markets in Malaysia were closed today for a public holiday.
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
