BLBG:Asian Currencies Poised for Worst Week Since November as Stocks Plummet
Asian currencies headed for their biggest weekly decline since November, led by Malaysia’s ringgit and South Korea’s won, as regional stocks plunged on concern the global economic recovery is stalling.
The MSCI Asia-Pacific Index of equities dropped 7.5 percent this week, the most since October 2008, as reports from the U.S. showed consumer spending fell in June for the first time since September 2009 and a July manufacturing index reached the lowest level in two years, damaging Asia’s export outlook. Global funds sold $2.1 billion more South Korean and Taiwanese shares than they bought this week through yesterday, exchange data show.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, declined 0.7 percent from a week ago to 119.16 as of 10:44 a.m. in Hong Kong. The ringgit weakened 1.4 percent to 3.0098 per dollar and South Korea’s won dropped 1.3 percent to 1,068.32, according to data compiled by Bloomberg. The Philippine peso fell 0.9 percent to 42.545.
“Stocks are plunging globally and there’s growing concern about a slowdown in global economic growth,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “That’s making investors risk averse.”
Bank of America Merrill Lynch cut gross domestic product forecasts for some Southeast Asian economies, citing lower expectations for growth in the U.S., Europe and Japan, according to a report received today. It reduced Singapore’s growth estimate for 2011 to 4.5 percent from 4.8 percent and the Philippine’s to 4.7 percent from 5.8 percent. Malaysia’s GDP growth may be below 4 percent in the second quarter, the bank said. The country’s economy expanded 4.6 percent in the first three months of the year, the smallest gain since 2009.
South Korean Meeting
The ringgit sank to a three-week low before a Labor Department report today that’s expected to show the U.S. failed to create enough jobs in July to reduce unemployment. The jobless rate held at this year’s highest level of 9.2 percent last month, according to a Bloomberg survey of economists.
“People are shying away from risk in reaction to the meltdown in the stock markets in the U.S. and Europe,” said Yeo Chin Tiong, head of financial markets at Alliance Bank Bhd. in Kuala Lumpur. “There are no signs of intervention from the central bank. What we are seeing is a lot of position squaring and adjustment.”
The won was set for its biggest weekly drop since February. South Korean Vice Finance Minister Yim Jong Yong held a meeting today, which started at 10 a.m. in Seoul, to discuss global economic and financial market conditions, according to ministry spokesman Hong Nam Ki.
‘Steep Slide Unlikely’
“Global stock market plunges are prompting foreign investors to sell Korean stocks, dragging the currency down,” said Han Sung Min, a foreign-exchange dealer at Busan Bank in Seoul. “Still, a steep slide is unlikely as market players think the government will start intervening around 1,075.”
Elsewhere, the Singapore dollar fell 1.2 percent this week to S$1.2202 against the greenback and Taiwan’s dollar dropped 0.5 percent to NT$29.026. The Thai baht weakened 0.3 percent to 29.94, Indonesia’s rupiah declined 0.4 percent to 8,540 and China’s yuan slipped 0.12 percent to 6.4436.
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
