BLBG:Asian Currencies Drop as Europe Debt Concern Deters Risk-Taking
Malaysia’s ringgit and the Thai baht led losses in Asian currencies as demand for riskier assets slowed before European leaders meet this week on measures to prevent their region’s debt turmoil from deepening.
Asian stocks snapped a two-day gain as the World Bank said economic growth in developing East Asia, which excludes India and Japan, will drop to an estimated 11-year low. Europe’s finance ministers meet in Luxembourg today to discuss closer banking cooperation and German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis began in 2009. On Oct. 10, Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande in Paris.
“Investors are still concerned about Europe’s problem,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “There has also been concern about global growth. Sentiment is weak today.”
The ringgit declined 0.6 percent to 3.0705 per dollar as of 10:57 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The baht fell 0.3 percent to 30.64, the Philippine peso weakened 0.1 percent to 41.485 while the Singapore dollar dropped 0.3 percent to S$1.2311.
The MSCI Asia Pacific Index (MXAPJ) Excluding Japan Index of shares slumped 0.7 percent, the most since Sept. 26. Economic expansion in developing East Asia will probably decelerate to 7.2 percent from 8.3 percent in 2011, the Washington-based World Bank said in a report today. That would be the slowest pace since 2001, according to data from the lender.
Exports Outlook
The ringgit snapped a two-day advance as economists in a Bloomberg News survey forecast Malaysia’s factory production probably shrank 2 percent in August from a year earlier, the first contraction since July 2011. The statistics department will report the data on Oct. 11.
“The weak exports and expectations of worsening factory output are damping demand for the ringgit,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong. “Chances are the Malaysian currency will continue to weaken in the near term.”
The Taiwan dollar’s one-month non-deliverable forwards weakened 0.2 percent to NT$29.248. Economists forecast the island’s overseas shipments will increase 1 percent in September from a year earlier, following six months of contraction. The report is due at 4 p.m. local time today.
Bank of Korea
South Korea’s won was little changed at 1,111.55 per dollar, halting a rally that took it to an 11-month high. The central bank will cut its seven-day repurchase rate to 2.75 percent from 3 percent on Oct. 11, according to 12 of 14 economists in a Bloomberg survey. Two forecast no change.
“There will be limits to the currency’s strengthening as there is caution against government intervention at this level,” said Byeon Ji Young, a Seoul-based foreign-exchange analyst at Woori Futures Inc. “The Bank of Korea may cut borrowing costs this week to prevent further inflows that lead to won appreciation.”
Elsewhere, India’s rupee fell 0.7 percent to 52.225 per dollar and Indonesia’s rupiah dropped 0.1 percent to 9,600. China’s yuan weakened 0.02 percent to 6.2864 from Sept. 28 as the local market reopened after a weeklong holiday. Vietnam’s dong slipped 0.1 percent to 20,910.
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
