BLBG:Asian Currencies Weaken As Data Shows Europe Slowdown Deepening
Asian currencies fell after data indicated an economic slump is deepening in Europe, bolstering demand for the relative safety of the dollar.
Indonesia’s rupiah led losses as the MSCI Asia-Pacific Index of shares snapped a six-day advance. Euro-area services and manufacturing output shrank in June for a fifth month and services unexpectedly contracted in Germany, reports showed yesterday. The European Central Bank will cut its benchmark interest rate today, according to 52 of 63 economists in a Bloomberg News survey. The Philippine peso strengthened after a sovereign-rating upgrade.
“There seems to be dollar demand as investors may want to square positions before some events like the ECB meeting,” said Disawat Tiaowvanich, a currency trader at Bangkok Bank Pcl.
The rupiah dropped 0.3 percent to 9,394 per dollar as of 9:23 a.m. in Jakarta, according to data from local banks compiled by Bloomberg. Thailand’s baht slipped 0.2 percent to 31.53, Malaysia’s ringgit fell 0.2 percent to 3.1630 and South Korea’s won lost 0.1 percent to 1,136.97.
The Bloomberg-JPMorgan Asia Dollar Index declined, with its 60-day historical volatility steady at 3.51 percent. The Dollar Index (MXAP), which tracks the greenback against the currencies of six major trading partners, rose 0.5 percent.
Philippine Upgrade
The peso bucked the regional trend with a 0.3 percent gain to 41.695 per dollar. It touched 41.610, just shy of the four- year high of 41.600 reached yesterday. Standard & Poor’s raised the nation’s debt rating yesterday by one level to BB+, one step below investment grade and the highest since 2003.
“It’s a confirmation of what the market expected,” said Rajeev De Mello, head of Asian fixed-income assets at Schroder Investment Management Ltd. in Singapore. “It would be positive for the currency as well as external and domestic bonds.”
The baht retreated from a two-week high after foreign funds sold $70 million more Thai shares than they bought yesterday, the first net sales since June 26, exchange data show.
The ringgit dropped for a second day before a meeting today at which all 19 economists surveyed by Bloomberg forecast Bank Negara Malaysia will keep its overnight rate at 3 percent. The decision is due at 6 p.m. in Kuala Lumpur.
The yuan fell 0.08 percent to 6.3531 per dollar as the People’s Bank of China weakened its daily fixing by 0.11 percent at 6.3193, the most since June 25.
Elsewhere, Taiwan’s dollar was little changed at NT$29.856 against its U.S. counterpart. The Vietnamese dong was steady at 20,885.
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
