BLBG:Korea’s Won Leads Drop in Asian Currencies on Europe Debt, Growth Concerns
South Korea’s won led declines among Asian currencies on concern Europe’s debt crisis and the slowing global economy will sap export demand.
The Bloomberg-JPMorgan Asia Dollar Index dropped before European leaders meet today in Brussels in an attempt to escalate their response to the crisis that has led to bailouts of Greece, Ireland and Portugal. Taiwanese export growth slowed last month, according to the median estimate of economists surveyed by Bloomberg before government data due today. A report today showed Japan’s machinery orders unexpectedly fell 6.9 percent in October from a month earlier.
“The global economy is not stable,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “Exports will slow down. Investors want to hold the U.S. dollar which has more liquidity.”
The won weakened 0.5 percent to 1,131.40 per dollar as of 12:10 p.m. in Seoul, according to data compiled by Bloomberg. Taiwan’s dollar, Malaysia’s ringgit and the Philippine peso fell 0.1 percent to NT$30.187, 3.1319 and 43.33, respectively.
The Bank of Korea left borrowing costs unchanged at 3.25 percent today, a decision predicted by all 16 economists surveyed by Bloomberg.
“The won is moving within a narrow range ahead of the European summit,” said Han Sung Min, a foreign-exchange dealer at Busan Bank in Seoul. “The central bank’s rate decision isn’t affecting markets as it was pretty much expected.”
‘Investors are Cautious’
Bank Indonesia will keep its benchmark interest rate at 6 percent at a review around noon in Jakarta, according to 17 of 22 economists surveyed by Bloomberg. Five predict a quarter of a percentage point cut. The central bank unexpectedly slashed its reference rate by 50 basis points last month. The rupiah gained 0.1 percent to 9,070 per dollar, according to prices from local banks compiled by Bloomberg.
“Investors are cautious because Bank Indonesia may surprise with a rate cut,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “Most of the negative sentiment globally and in Asia is coming from Europe.”
China’s yuan gained for the first time in four days as the central bank raised the currency’s reference rate by the most this week. The People’s Bank of China set the daily fixing 0.04 percent stronger at 6.3319 per dollar, 0.5 percent higher than the currency’s close yesterday.
“The stronger fixing sends signals to the market that yuan depreciation is not on the agenda,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank. “Investors are buying the yuan as they see the rate is now more favorable. Concerns over economic growth remain so the gain could be limited.”
The yuan rose 0.07 percent to 6.3596 per dollar, according to the China Foreign Exchange Trade System. The currency is allowed to fluctuate as much as 0.5 percent on either side of the PBOC’s fixing.
Elsewhere, Thailand’s baht advanced 0.1 percent to 30.77 per dollar. The Singapore dollar retreated 0.2 percent to S$1.2863, while Vietnam’s dong was little changed at 21,008.
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net Lilian Karunungan in Singapore at lkarunungan@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
