BLBG:Asian Currencies Drop as Greece Concern, China Inflation Temper Optimism
Asian currencies declined after Greek debt negotiations stalled and faster inflation in China tempered optimism the region’s central banks will ease policies to shore up economic growth.
South Korea’s won snapped a two-day rally as the central bank kept borrowing costs on hold. Malaysia’s ringgit retreated from a five-month high after Greek leaders failed to agree on some economic measures required to win more financial aid. Data showed today consumer prices in China rose 4.5 percent last month from a year earlier, after December’s 4.1 percent gain, exceeding all 33 estimates in a Bloomberg News survey.
“The lack of progress in Greece disappoints investors and is bad for market sentiment,” said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank.
Korea’s won slid 0.4 percent to 1,120.43 per dollar as of 10:50 a.m. in Seoul and the ringgit declined 0.1 percent to 3.0110, according to data compiled by Bloomberg. The Philippine peso dropped 0.2 percent to 42.283. India’s rupee weakened 0.3 percent to 49.28.
The Bloomberg-JPMorgan Asia Dollar Index (ADXY) fell 0.1 percent and the MSCI Asia Pacific Index of stocks dropped for the first time in four days. Greek Prime Minister Lucas Papademos summoned the nation’s creditors for more talks today to resolve a dispute over pension cuts needed to secure a 130 billion-euro ($172 billion) rescue package.
‘Lock in Gains’
“The market wants to lock in some gains because the rally has already gone some way,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “As for China, the authorities are likely to want to refrain from too much easing too soon that could negate recent efforts to cool the property market.”
China’s yuan fell 0.08 percent to 6.2993 per dollar in Shanghai, according to China Foreign Exchange Trade System.
The Bank of Korea held its seven-day repurchase rate at 3.25 percent today, unchanged for an eighth straight month, as the economy slowed and exports declined due to the European debt crisis. Bank Indonesia will also hold its benchmark rate at 6 percent later today, according to 11 of 15 analysts in a Bloomberg survey.
Malaysian Data
Malaysia’s ringgit weakened before government reports today that may show factory output lost further momentum in December as exports grew at the slowest pace in seven months.
Shipments rose 6 percent in December from a year earlier after increasing 8 percent in November, according to the median forecast of 18 analysts in a Bloomberg survey before the data is released at 2 p.m. local time. Industrial production rose 1.7 percent, the least since a contraction in July, according to economists in a separate poll.
A central bank report on Feb. 15 may show the economy expanded 4.9 percent in 2011 from 7.2 percent in 2010, according to economists in another survey.
“The issue in Greece and the slower economic data are weighing on the ringgit,” said Calbert Loh, head of treasury at Bangkok Bank Bhd. in Kuala Lumpur.
Elsewhere, Taiwan’s dollar gained 0.2 percent to NT$29.477 versus the greenback and Indonesia’s rupiah was little changed at 8,936. Vietnam’s dong climbed for a third day, gaining 0.1 percent to 20,895 and the Thai baht was steady at 30.74.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
