BLBG:Asian Currencies Drop To Five-Month Low As Greece May Leave Euro
Asian currencies dropped to a five- month low, led by India’s rupee, as mounting concern Greece will quit the euro deterred risk-taking.
The MSCI Asia-Pacific Index (MXAP) of shares snapped a two-day advance after former Greek Prime Minister Lucas Papademos told the Wall Street Journal yesterday that leaving the single currency would be “catastrophic,” although “it cannot be excluded that preparations are being made to contain the possible consequences” of an exit. Fitch Ratings cut Japan’s local-currency credit rating by one step yesterday, and the foreign-currency grade by two levels.
“Investors are demanding the dollar to protect against uncertainties in the market,” said Kim Do Hee, a Seoul-based currency dealer at Australia & New Zealand Banking Group Ltd. (ANZ) “Market sentiment may flip should there be positive comments from today’s summit,” he said, referring to a meeting of European Union leaders in Brussels.
India’s rupee slid 1.3 percent to 56.1125 at 3:06 p.m. in Mumbai, according to data compiled by Bloomberg. The rupiah fell 0.4 percent to 9,260 per dollar, the won declined 0.8 percent to 1,172.73, while the Philippine peso fell 0.7 percent to 43.44. The Bloomberg-JPMorgan Asia Dollar Index reached the lowest level since Dec. 20.
The Korean currency approached a five-month low as overseas investors cut holdings of the nation’s shares, adding to net sales of $2.9 billion this month through yesterday.
Greece’s possible exit from the euro and sanctions against Iran are increasing market uncertainties, South Korean Finance Minister Bahk Jae Wan said today. Iran is under multiple international sanctions owing to concern it is pursuing nuclear weapons and a European Union ban on oil imports from the country takes effect July 1.
Malaysian GDP Data
Malaysia’s ringgit touched a four-month low before data due today that may show the country’s economic growth is slowing. The currency fell 0.9 percent to 3.1465 per dollar and reached 3.1490, the weakest level since Jan. 16.
Gross domestic product in Malaysia increased 4.6 percent in the three months through March from a year earlier, compared with 5.2 percent in the previous quarter, according to a Bloomberg survey of economists before the report due at 6 p.m. in Kuala Lumpur.
“If the situation in Europe deteriorates, the Malaysian economy will be impacted negatively,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur.
Thai Trade Report
The baht dropped for a third day ahead of a government report on May 25 that economists surveyed by Bloomberg predict will show exports rose 6.4 percent in April from a year earlier, while imports jumped 18.3 percent. That compared with a 6.5 percent decline in overseas sales in March and a 25.6 gain in imports.
“In terms of Thailand’s recovery from the floods, it boosts imports but external demand is not strong enough to increase exports as much,” said Minori Uchida, chief analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. Tokyo. “It could be baht negative in the long run.”
Elsewhere, Taiwan’s dollar slipped 0.1 percent to NT$29.586 against its U.S. counterpart. China’s yuan weakened 0.18 percent to 6.3345, while Vietnam’s dong was steady at 20,853.
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
