BLBG:Asian Currencies Drop This Week As Data Confirms China Slowdown
Asian currencies headed for a second weekly loss as Chinese data added to signs the global economy is slowing, helping drive the worst five-day performance in regional stocks in almost two months.
South Korea’s won snapped a six-week winning streak after the central bank cut interest rates and trimmed its 2012 growth forecast to 3 percent from 3.5 percent. China’s gross domestic product increased by the least in more than three years in the second quarter, while imports missed economists’ estimates, damping the outlook for Asian exports.
“There has been growing concern over the global economic slowdown and that makes it hard for investors to take riskier positions,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “Sentiment is rather weak.”
The won weakened 1.1 percent to 1,150.45 per dollar this week as of 1:34 p.m. in Seoul, according to data compiled by Bloomberg. The Philippine peso fell 0.5 percent to 42.007, Indonesia’s rupiah lost 0.8 percent to 9,480 and Thailand’s baht declined 0.5 percent to 31.78.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, dropped 0.1 percent, following a 0.5 percent loss in the previous week. The gauge’s 60-day historical volatility climbed to 3.65 percent from 3.64 percent on July 6.
Italy, China
The Bank of Korea lowered its growth assessment after unexpectedly cutting its benchmark seven-day repurchase rate by 25 basis points to 3 percent yesterday, the first reduction since February 2009. Bank Indonesia kept borrowing costs unchanged yesterday at 5.75 percent.
China, the world’s second-largest economy, grew 7.6 percent in the second quarter from a year earlier, compared with the 8.1 percent pace in the first three months and the median estimate in a Bloomberg survey of 7.7 percent, the statistics bureau said in Beijing today.
Europe’s escalating debt crisis prompted Moody’s investors Service to lower Italy’s credit rating yesterday as investors pushed up the nation’s cost of borrowing on concern it may fail to meet fiscal targets.
“China holds the key to the economic recovery and if China’s rebound kicks off in the second half, the outlook for many nations including South Korea could improve,” said Oh Suk Tae, an economist at SC First Bank Korea Ltd. in Seoul.
The yuan fell 0.2 percent to 6.3760 per dollar this week, the most since the five days ended June 1, according to the China Foreign Exchange Trade System. The central bank lowered the currency’s daily reference rate for a third day, by 0.05 percent to 6.3247.
Singapore GDP Contracts
Singapore data today added to signs China’s slowing growth is having an impact on other regional nations. The city-state’s GDP fell an annualized 1.1 percent in the three months through June from the previous quarter, when it climbed a revised 9.4 percent, the Trade Ministry said in an e-mailed statement. The median estimate of 14 economists in a Bloomberg News survey was for a 0.6 percent expansion.
China’s exports grew 11.3 percent last month, slowing from 15.3 percent in May, while imports increased 6.3 percent compared with 12.7 percent. Foreign-exchange reserves fell $65 billion to $3.24 trillion at the end of June, the People’s Bank of China said yesterday. Policy makers cut the one-year lending rate in June and July.
“The decline in reserves probably reflects capital outflows as growth slows,” said Tommy Ong, senior vice- president of treasury and markets at DBS Bank (Hong Kong) Ltd. “We expect China’s growth to rebound in the third quarter as government stimulus should come into effect.”
Elsewhere, Taiwan’s dollar depreciated 0.2 percent for the week to NT$29.984 against its U.S. counterpart and Malaysia’s ringgit lost 0.3 percent to 3.1873. India’s rupee was down 0.2 percent at 55.5875, while the Vietnamese dong climbed 0.1 percent to 20,860.
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
