BLBG:Won Leads Drop in Asian Currencies as Reports Highlight Slowdown
South Korea’s won led losses in Asian currencies after reports this week added to concern the global economic slowdown is deepening, damping the region’s export outlook.
The International Monetary Fund yesterday cut its global growth forecast to the least since the 2009, and warned today that Europe’s debt crisis could worsen. Philippine overseas sales unexpectedly fell in August, official data showed today. Industrial production in Malaysia dropped in August for the first time in a year and the Bank of Korea will cut its benchmark interest rate tomorrow, according to Bloomberg surveys.
“Sentiment for the regional currencies will remain weak for now due to global growth concerns highlighted by the IMF,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Asian nations like Thailand and Malaysia that depend on exports will see a bigger negative impact from the slowdown in external demand.”
The won weakened 0.4 percent to 1,114.70 per dollar as of 11:42 a.m. in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit dropped 0.3 percent to 3.0822, while Thailand’s baht and the Philippine peso declined 0.2 percent to 30.71 and 41.547, respectively.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-active currencies, fell 0.1 percent and touched a one-week low. Its 60-day historical volatility was steady at 2.64 percent. The MSCI Asia Pacific Index (MXAPJ) of shares slumped 0.9 percent, extending its slide this week to 1.6 percent.
Bearish IMF Report
European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the region’s fiscal crisis, the IMF said in a report released today. That’s 18 percent more than the Washington-based lender estimated in April. The IMF lowered its international growth forecast for 2012 to 3.3 percent, compared with a July estimate of 3.5 percent.
The peso dropped the most in two weeks after the statistics office said exports fell 9 percent in August from a year earlier, compared with a median forecast for a 5.5 percent gain in a Bloomberg survey. Shipments rose 6 percent in July.
The ringgit touched the lowest level in almost two weeks ahead of a government that may show factory output fell 2 percent in August from a year earlier, the first drop since July 2011. Exports decreased 4.5 percent in August, following a 2.6 percent decline in July, official data showed last week.
“The weak factory output data tomorrow could be another excuse to sell the ringgit,” said Vishnu Varathan, a Singapore- based economist at Mizuho Corporate Bank Ltd. “People are still chewing over the IMF’s bearish report.”
Korean Rate Cut
The won dropped the most in almost three weeks ahead of the Bank of Korea meeting, at which 13 of 16 economists surveyed by Bloomberg forecast it will cut the seven-day repurchase rate to 2.75 percent. Three predict no change.
The yuan was little changed at 6.2872 per dollar after the People’s Bank of China weakened its reference rate to 6.3449, the lowest since Sept. 27. Alcoa Inc., the largest U.S. aluminum producer, cut its forecast for global consumption of the metal, citing a slowdown in Asia’s largest economy. The Chinese currency rallied 3.6 percent in 2010, 4.7 percent in 2011 and is steady this year.
“In light of the current global economic uncertainty, China is unlikely to maintain the same strong rate of appreciation” as we have seen in the past few years, Gerard Teo, head of strategy and currency at Fullerton Fund Management in Singapore, wrote in an e-mailed response to questions yesterday. The yuan may climb to 6.28 per dollar by the end of June 2013 should the global outlook improve, he wrote.
Elsewhere, Indonesia’s rupiah weakened 0.1 percent to 9,613 per dollar and the Vietnamese dong was little changed at 20,865. Financial markets in Taiwan are closed for a holiday.
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: James Regan at jregan19@bloomberg.net
