Asian currencies fell this week, with South Korea’s won and Indonesia’s rupiah sliding the most since mid-2010, as concern Europe’s debt crisis will worsen led investors to favor safer bets than emerging-market assets. The Bloomberg-JPMorgan Asia Dollar Index touched a five- month low yesterday as global funds pulled more than $2 billion from equities in South Korea, Taiwan and Indonesia since the end of last week. The Asian Development Bank this week cut its 2011 growth forecast for the region excluding Japan to 7.5 percent, from an April estimate of 7.8 percent. The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, slumped 0.6 percent this week to 117.63 as of 10:56 a.m. in Hong Kong. The won dropped 2.6 percent to 1,105.63 per dollar and Indonesia’s rupiah fell 2.1 percent to 8,775, according to data compiled by Bloomberg. The Philippine peso dropped 1.9 percent to 43.315 and Taiwan’s dollar fell 1.2 percent to NT$29.57. “Asian currencies are under downward pressure as the European debt crisis prevails in the market and deters risk- taking,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “There is growing concern about the outlook for exports from Asia given conditions in the U.S. and Europe.” Economic Risks India’s industrial production expanded in July at the slowest pace since October 2009 and Philippine exports fell for a third straight month, reports showed this week. Taiwan’s export orders, an indication of shipments in the next one to three months, increased 7.6 percent in August from a year earlier, compared with growth of 11.1 percent in July, according to the median forecast of economists in a Bloomberg survey before official data due on Sept. 20. South Korea’s won was poised for its biggest weekly loss since June 2010 and Finance Minister Bahk Jae Wan said at a meeting today that global economic risks are growing. His ministry phoned media outlets including Bloomberg News yesterday to signal possible intervention in the currency market, the first time it’s done so since April 2010. The won gained 0.9 percent today after the European Central Bank said it will coordinate with the Federal Reserve and international policy makers in lending dollars to euro-area banks to ensure they have enough cash through year-end. U.S. retail sales stagnated in August and manufacturing in the New York region is contracting at the fastest pace since November, data showed this week. “The international policy makers’ pledge to lend dollars to euro-zone banks helped calm investor sentiment,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “Still, it’s not a fundamental solution, and will only support markets for the short term.” Intervention The rupiah was headed for its biggest weekly drop since May 2010. Bank Indonesia intervened in the rupiah and bond markets, Deputy Governor Hartadi Sarwono said on Sept. 14, when the currency declined as much as 2.6 percent and reached 8,939, the weakest level since February. “Talk of a possible Greek default and the country exiting from the euro region” deterred risk-taking, said Wiwig Santoso, head of treasury and markets at PT Bank DBS Indonesia in Jakarta. “There are concerns of a global economic slowdown, and the rupiah isn’t isolated from market developments.” Elsewhere, Thailand’s baht fell 0.9 percent this week to 30.34 per dollar, Malaysia’s ringgit dropped 2.5 percent to 3.0860 and India’s rupee declined 2.1 percent to 47.56. Financial markets in Malaysia are closed today for a holiday. China’s yuan strengthened 0.08 percent to 6.3833. To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

Source