By Bob Chen July 29 (Bloomberg) -- Asian currencies declined, led by Malaysia’s ringgit, on speculation foreign funds will trim their local asset holdings after a more-than-forecast drop in U.S. consumer confidence raised doubts about an economic recovery. Taiwan’s dollar and Thailand’s baht weakened on speculation policy makers are stemming gains to help revive exports. South Korea’s fifth monthly current-account surplus helped limit the won’s losses. The MSCI Asia Pacific Index of shares snapped its longest winning streak in more than five years after the U.S. Conference Board yesterday reported the consumer sentiment index dropped for a second month in July. “It is negative for Asian exports and a surprise to the market,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “That will affect Asian stocks and currencies.” The ringgit declined 0.7 percent to 3.5335 a dollar as of 5:17 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. Korea’s won fell 0.3 percent to 1,239.95. It earlier slid as much as 0.5 percent. The Taiwan dollar dropped 0.4 percent to NT$32.871, after touching NT$32.680, the strongest level since July 2. The Conference Board’s confidence index dropped to 46.6, following a reading of 49.3 in June, the New York-based research group said. Retail sales in Japan, the world’s second-largest economy, slid 3 percent in June from a year earlier, the Trade Ministry said today in Tokyo. It was a 10th month of declines. Taiwan Intervention South Korea’s current-account surplus widened to $5.43 billion last month from a revised $3.5 billion in May, the Bank of Korea said in Seoul today. The current account is the broadest measure of trade, tracking the international flow of goods, services and investment income. Taiwan’s dollar retreated from its strongest level in almost four weeks on speculation the central bank intervened to help combat a 10-month slide in exports. The island’s currency has rallied 7.4 percent from an eight-year low reached in March as data pointing to a global economic recovery bolstered the outlook for trade and spurred demand for emerging-market assets. Overseas investors added to their holdings of Taiwan stocks for an 11th day in a row. “The central bank has been buying and intervening to keep it stable,” said Wai Ho Leong, a Singapore-based economist at Barclays Capital. The Thai baht retreated from near a 10-month high. It slipped 0.1 percent to 33.99 a dollar. Central banks intervene to influence exchange rates by arranging sales or purchases of foreign currencies. Boosting Reserves The Indonesian currency fell for the first time in five days on speculation the central bank will step up dollar purchases to bolster its international reserves. The International Monetary Fund said today that Indonesia needs to gradually rebuild its assets and follow a “cautious” monetary policy to sustain investors’ confidence. The rupiah weakened 0.6 percent to 9,985 per dollar in Jakarta. “The rupiah is a bit lower after we saw some dollar buying from state banks yesterday,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta. “It looks like Bank Indonesia is still trying to grow its reserves and even the IMF thinks they should.” Malaysia’s ringgit dropped from near a four-week high on speculation the central bank will slow the pace of the currency’s gains as a recovery lags behind other economies in the region. Rate Decision The currency snapped a four-day advance before a central bank policy meeting today. Governor Zeti Akhtar Aziz has said Malaysia’s economic performance in the second quarter was similar to the first, when gross domestic product shrank 6.2 percent from a year earlier. The pace of contraction in neighboring Singapore, Malaysia’s biggest trading partner, eased to 3.7 percent from 9.6 percent. “The ringgit needs to adjust to the fact that economic recovery is still weak,” said Irwaan Iskandar Abrahim, who helps manage $130 million at ASM Investment Services Bhd. in Kuala Lumpur. All 23 economists surveyed by Bloomberg News forecast Zeti will keep the overnight policy rate unchanged at 2 percent for a third straight meeting. The decision is due at 6 p.m. local time. Zeti said last month that Malaysia has the “flexibility” to lower interest rates should external conditions deteriorate. Elsewhere, India’s rupee declined 0.4 percent to 48.4175 against the U.S. currency, the Philippine peso fell 0.2 percent to 48.107 and Singapore’s dollar weakened 0.2 percent to S$1.4417. China’s yuan was little changed at 6.8315. To contact the reporter on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net

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