BLBG:Asian Currencies Decline, led by Rupiah, After European Rating Warnings
Indonesia’s rupiah, after ratings companies said last week’s European summit did little to ease the region’s debt crisis, weakening the outlook for exports.
The MSCI Asia-Pacific Index (MXAP) of shares fell 1.4 percent after Moody’s Investors Service said yesterday the summit doesn’t diminish the risk of credit-rating downgrades for European nations. Fitch Ratings said a comprehensive solution has not yet been offered and predicted a “significant economic downturn” in the region. Global investors sold $17.6 billion more South Korean, Taiwanese and Thai stocks than they bought this year, exchange data shows.
“The European summit failed to reassure investors the debt crisis will ease soon, and this is fueling concern about an economic slowdown,” said Kim Doo Hyun, a senior currency dealer at Korea Exchange Bank in Seoul. “Asian currencies, including the won, will continue this weakening trend at least until year- end.”
The rupiah dropped 0.7 percent to 9,115 per dollar as of 9:56 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. South Korea’s won and the Philippine peso declined 0.6 percent to 1,153.79 and 43.865, respectively. Thailand’s baht dropped 0.7 percent from Dec. 9 to 31.16 per dollar. Thailand’s financial markets were closed yesterday for a public holiday.
‘Much Weaker Outlook’
Philippine exports fell 14.6 percent in October from a year earlier, the National Statistics Office said today. India’s factory output shrank 5.1 percent in October, the first contraction since June 2009, the government said yesterday. China’s overseas sales rose 13.8 percent in November from a year earlier, the smallest gain since 2009, as demand from Europe declined, data showed last week.
“As the European debt crisis is likely to linger for longer, China’s exporters are facing a much weaker outlook next year,” said Tommy Ong, Hong Kong-based senior vice president of treasury and markets at DBS Group Holdings Ltd. “Exporters may restrain from any aggressive currency hedging for the time being, which means there’ll be less demand for the yuan.”
The yuan dropped the most in a week as the People’s Bank of China weakened its daily fixing by 0.1 percent, the most since Nov. 24, to 6.3359 per dollar. The currency declined 0.07 percent to 6.3653 per dollar, according to the China Foreign Exchange Trade System. The yuan is allowed to fluctuate as much as 0.5 percent on either side of the PBOC’s reference rate.
Elsewhere, Malaysia’s ringgit weakened 0.3 percent to 3.1763. The Singapore dollar dropped 0.2 percent to S$1.3008, Taiwan’s dollar retreated 0.1 percent to NT$30.257 and Vietnam’s dong rose 0.5 percent to 21,010.
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
