SG:Asian Currencies Head for Weekly Drop on Europe's Debt Crisis
May 13 (Bloomberg) -- Asian currencies were set for a weekly loss, led by India's rupee and South Korea's won, as concern Europe's debt crisis will worsen bolstered demand for dollars.
The won dropped to a three-week low after the Bank of Korea unexpectedly held off from raising interest rates at a policy meeting today, a day after Bank Indonesia left borrowing costs unchanged. The yuan fell the most in three months as China raised lenders' reserve-requirement ratios for the fifth time this year and government data showed industrial output moderated in April. The MSCI Asia Pacific Index of regional stocks was headed for a weekly loss and prices of crude oil, copper and silver declined on concern global economic growth will slow.
"This week there was a commodity sell-off and concern on Greece's debt crisis," said Joanna Tan, a Singapore-based regional economist at Forecast Singapore Pte. "The underlying sentiment in Asian currencies is caution with Europe's problems still ongoing and worries about commodities."
The rupee fell 0.5 percent to 44.9975 per dollar as of 11:09 a.m. in Hong Kong, according to data compiled by Bloomberg. The won lost 0.6 percent to 1,089.55, Singapore's dollar dropped 0.5 percent to S$1.2418 and Malaysia's ringgit weakened 0.3 percent to 3.0100. The yuan slid 0.12 percent to 6.5015.
Greece Bailout
Euro-region finance ministers will meet next week to discuss more support for Greece, Luxembourg's Jean-Claude Juncker, who leads the group, said yesterday. The nation has already been granted a 110 billion-euro ($156 billion) bailout, while Ireland and Portugal have also received financial aid from the European Union.
"The Greece situation remains a big risk in the background for the ringgit market, supporting demand for the dollar," said Nik M. Khairul, a treasury dealer at Asian Finance Bank Bhd. in Kuala Lumpur. "Commodity prices and China's economic activity are pointing down, which creates question marks on future rate increases in Asia."
The Bank of Korea kept its seven-day repurchase rate at 3 percent following a monthly review today. Two of 14 economists surveyed by Bloomberg forecast the decision, while 12 predicted policy makers would raise borrowing costs by a quarter of a percentage point for the third time this year to curb inflation. Bank Indonesia kept its benchmark rate at 6.75 percent yesterday, a decision predicted by all 10 economists in a Bloomberg survey.
"Expectations for a rate increase had been limiting declines in the won this week," said Yun Se Min, a currency dealer at Busan Bank in Seoul. The currency fell 0.5 percent today.
The baht was little changed this week, having recovered earlier losses after Fitch Ratings raised the outlook on Thailand's local-currency credit rating yesterday to stable from negative, citing an earlier-than-expected stabilization in the nation's finances.
Elsewhere, the Philippine peso declined 0.3 percent this week to 43.215 per dollar. Taiwan's dollar rose 0.4 percent NT$28.664 and the rupiah gained 0.2 percent to 8,559.
--With assistance from Seyoon Kim in Seoul and David Yong in Singapore. Editors: James Regan, Andrew Janes
