By Lilian Karunungan July 22 (Bloomberg) -- Asian currencies slipped from near a six-week high after Federal Reserve Chairman Ben S. Bernanke said financial markets remain “stressed” and risks to an economic recovery persist. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, declined for a second day on concern foreign funds will shun emerging-market assets after U.S. commercial lender CIT Group Inc. said it may file for bankruptcy. Bernanke told U.S. lawmakers yesterday that the Fed intends to maintain a “highly accommodative” monetary policy for an “extended period.” “Bernanke’s statement was good to some extent in that he talked about support for the economy but he was quite clear a lot of uncertainty remains,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. “Investors are going to reflect that things haven’t improved drastically the way the second-quarter numbers are suggesting and whether excessive risk-taking is warranted.” Indonesia’s rupiah weakened 0.3 percent to 10,085 as of 3:40 p.m. in Jakarta, according to data compiled by Bloomberg. The Malaysian ringgit dropped 0.2 percent to 3.5540, India’s rupee declined 0.2 percent to 48.5350 and Taiwan’s dollar fell 0.2 percent to NT$32.875. Remain ‘Stressed’ The Asia Dollar Index slipped 0.1 percent to 107.99. It reached 108.28 on each of the last two days, the highest level since June 10. In his semi-annual testimony before the House Financial Services Committee, Bernanke said the U.S. economy is showing “tentative signs of stabilization” and didn’t indicate a sustained recovery has taken hold yet. “The pace of decline appears to have slowed significantly,” he said. At the same time, “in light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery.” CIT said it may post a second-quarter loss of more than $1.5 billion and its “existing liquidity” is not enough to repay debt maturing next month. Financial firms worldwide have announced credit losses of about $1.5 trillion since the financial crisis began in the second half of 2007. Barclays Plc will need another 12.8 billion pounds ($21 billion) and Royal Bank of Scotland Group Plc will require an additional 8.5 billion pounds to expand under new regulatory rules, the Telegraph reported, citing JPMorgan Securities Ltd. The yen and the dollar strengthened against the euro as investors sought refuge in the currencies. The Japanese currency rose to 132.47 per euro from 133.36 in New York yesterday. It climbed to 93.37 versus the dollar from 93.74. Malaysian Exports Malaysia’s ringgit fell for a second day as Trade Minister Mustapha Mohamed said overseas sales may not rebound for another two months. “The safety bid for dollars is weakening most Asian currencies,” said D. Sivadass, who trades currency forwards at EON Bank Bhd. in Kuala Lumpur. “Money is flowing back into U.S. assets as people avoid risky bets.” Malaysian exports may not bottom out for another couple of months, Mustapha told reporters in Singapore today. The government “thought it would happen earlier but unfortunately it will be later than expected,” he said. The economy probably shrank in the second quarter, reflecting “very much the same” performance in the first three months when gross domestic product contracted 6.2 percent form a year earlier, Bank Negara Malaysia said on July 8. Stock Purchases South Korea’s won traded near a six-week high against the dollar as overseas investors bought more local equities than they sold for a sixth day. The currency is Asia’s best performer in the past week. The Bank of Korea will this week report gross domestic product expanded in the second quarter at the fastest pace in five years, according to economists surveyed by Bloomberg. The won was 1,248.05 per dollar as of the 3 p.m. close in Seoul, compared with 1,248.70 yesterday, according to Bloomberg data. The currency has climbed 5.5 percent in the past six days and yesterday touched 1,239.38, its strongest level since June 4. “When the won goes under 1,250, importers start buying dollars,” said Sam Hong, a currency dealer with Shinhan Bank in Seoul. “At 1,230 to 1,250, there’s very strong support” for the dollar, said Hong, who predicts the won will strengthen to 1,200 by the end of this year as the economy improves. South Korea’s gross domestic product grew 2.2 percent in the second quarter from the previous three months, the most since 2003, according to the median estimate of economists surveyed by Bloomberg News before a July 24 report. The economy barely grew in the first quarter and contracted in the three months through December as recessions in the U.S., Europe and Japan battered exports. Elsewhere, the Philippine peso fell 0.3 percent to 48.165 per dollar, the Thai baht was unchanged at 34 and Singapore’s dollar slipped 0.1 percent to S$1.4437. China’s yuan traded at 6.8305, from 6.8307 yesterday. To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.

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