BLBG:Rupee Leads Asia Currency Declines This Week on Recovery Concern
Asian currencies fell this week by the most in more than a month as worse-than-projected data from the U.S. heightened concern the global recovery is stalling, damping the outlook for the region’s exports.
India’s rupee reached the lowest since December, while Indonesia’s rupiah dropped to a level last seen in June 2010 as regional stocks fell to a one-week low. Reports this week showed the euro-area jobless rate rose to 10.9 percent in March, the highest since April 1997, and the services industry in the U.S. grew slower than economists predicted in April as consumer confidence waned. Australia’s central bank cut its growth forecast today, citing weaker job and housing markets.
“The currency market is driven by data which has been mixed and not pointing to a sharp recovery,” said Jackit Wong, a regional economist at Natixis Asia Ltd. in Hong Kong. “It will disappoint people looking to the U.S. to compensate for a recession in Europe or a slowdown in China.”
The rupee slumped 2.4 percent to 53.8350 per dollar as of 2:02 p.m. in Mumbai from a week ago, according to data compiled by Bloomberg. Thailand’s baht lost 0.7 percent to 30.98 for its worst five-days of 2012 and the rupiah dropped 0.7 percent to 9,247 after trading as low as 9,266.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.32 percent this week, the most since a 0.33 percent drop in the period ended March 23. Its 60-day historical volatility declined to 2.72 percent from 2.79 percent on April 27.
Job Report
The rupee’s plunge “reflects the weakening of India’s fundamentals caused by the continued wide deficit in trade of goods, and simultaneous outflows of foreign funds,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, wrote in a report today. “It will take either regulatory measures or heavy central bank intervention to change the trend.”
The U.S. Institute for Supply Management said yesterday its non-manufacturing index fell to a four-month low of 53.5 in April. Three Federal Reserve presidents said they don’t see the need for a new round of bond-buying, denting prospects for further fund inflows into emerging-market assets. The Reserve Bank of Australia forecast economic growth of 3 percent for 2012, compared with a 3.5 percent estimate in February, in its quarterly policy statement.
China’s yuan gained 0.06 percent to 6.3062 per dollar from a week ago, as the U.S.-China strategic economic dialogue continued in Beijing. Commerce Minister Chen Deming said yesterday the nation will post a trade surplus of more than $10 billion in April, compared with the $9.9 billion median estimate of 14 analysts surveyed by Bloomberg News before the data due on May 10.
China Talks
“It’s almost like a habit for China to ease tensions at high-level meetings with the U.S. by strengthening the yuan,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “The trade surplus estimate is a surprise to the market, providing some short-term upside to the yuan.”
The baht fell for a third day after the Bank of Thailand kept its benchmark interest rate at 3 percent on May 2. An official report on April 30 showed the nation’s exports fell 6.8 percent in March, compared with a 1.2 percent gain the previous month.
South Korea’s won closed 0.2 percent weaker today at 1,131.50 per dollar in Seoul, trimming this week’s advance to 0.3 percent. The Bank of Korea will keep its benchmark interest rate at 3.25 percent for an 11th month at a review on May 10, according to all nine analysts surveyed by Bloomberg.
“With weak data from the U.S., the won is halting its recent appreciation,” said Yun Se Min, a currency trader at Busan Bank in Seoul.
Elsewhere, Taiwan’s dollar strengthened 0.2 percent this week to NT$29.28 against its U.S. counterpart and the Philippine peso climbed 0.1 percent to 42.32. Malaysia’s ringgit dropped 0.3 percent to 3.0412, while Vietnam’s dong advanced 0.2 percent to 20,853.
To contact the reporters 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
