BLBG:Asian Currencies Set for Weekly Loss on Greece, Export Slowdown
Asian currencies headed for a second weekly drop after a political impasse in Greece roiled global markets and official reports showed exports from China, Malaysia and the Philippines slowed.
South Korea’s won headed for its worst five-day loss since December while Malaysia’s ringgit and the Philippine peso slid the most in eight weeks as global funds pulled $1.1 billion out of emerging-market stocks, according to a Citigroup Inc. report citing EPFR Global data. Greece’s political leaders are yet to agree on forming a new government following a May 6 election, fueling concern the country will renege on bailout accords. French Socialist Francois Hollande, who has called austerity measures to be delayed, was elected president.
“Events in Europe continue to put risk appetite in Asia under pressure,” said Roy Teo, a currency strategist at ABN Amro Private Bank in Singapore. “The risk is still to the downside, especially with renewed worries about China’s economic growth.”
The won slumped 1.2 percent this week to 1,144.90 per dollar as of 12:11 p.m. in Seoul, the biggest loss in five months, according to data compiled by Bloomberg. The ringgit dropped 0.9 percent to 3.0725, the peso weakened 0.3 percent to 42.450 and China’s yuan declined 0.19 percent to 6.3180, the lowest level since April 20.
The Bloomberg-JPMorgan Asia Dollar Index (MXAP) rose dropped 0.3 percent from a week ago and reached the lowest level since mid- January on May 9. Its 60-day historical volatility rose to 2.74 percent from 2.72 percent a week ago. The MSCI Asia Pacific Index of stocks plunged 4 percent, the biggest weekly loss since November, as JPMorgan Chase & Co. disclosed a $2 billion trading loss on synthetic credit securities.
Slowing Exports
“Overseas investors continuing to sell Korean stocks and ongoing uncertainties in Europe are limiting demand for the won,” said Hong Seok Chan, a Seoul-based currency analyst at Daeshin Economy Research Institute.
Asian currencies tumbled after government reports this week showed Malaysia’s exports unexpectedly shrank 0.1 percent in March from a year earlier while shipments from Philippines contracted 1.2 percent. China’s overseas sales grew 4.9 percent while imports rose 0.3 percent in April, both trailing economists’ forecasts.
“The weak data cast doubts on the strength of China’s domestic consumption,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank. The yuan may trade around 6.3 per dollar this quarter, he said.
Interest Rates
The Bank of Korea kept its benchmark interest rate at 3.25 percent on May 10, while Bank Indonesia maintained its reference rate at 5.75 percent. Bank Negara Malaysia will keep the policy rate at 3 percent for a sixth straight meeting today, according to all 18 economists in a Bloomberg survey.
The rupee gained in the week, erasing earlier losses, after the Reserve Bank of India announced policy changes to arrest the currency’s slide toward a record low.
The Indian currency rose 0.8 percent to 53.425 per dollar in Mumbai yesterday after the central bank said exporters must convert half of their overseas earnings, with compliance set within a fortnight. The currency fell to as low as 53.905 on May 10, within 0.7 percent of an all-time low of 54.305 reached on Dec. 15.
“We’re pretty much at the bottom in terms of the rupee and most of the bad news is in the price,” Hans Goetti, the Singapore-based chief investment officer for Asia at Finaport Investment Intelligence that oversees $1.5 billion, told Bloomberg UTV yesterday. “We don’t see much of a downside risk for Indian markets from here.”
Elsewhere, Thailand’s baht fell for a second week, losing 0.6 percent to 31.15 per dollar, near the lowest since January. Taiwan’s dollar slipped 0.3 percent to NT$29.366, snapping a four-week advance. Indonesia’s rupiah gained 1 percent, reversing last week’s decline, on speculation the central bank sought to bolster the exchange rate.
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
