Bloomberg News

Asian Currencies Slide as U.S. Data, Greece Deters Risk Taking

June 02, 2011

June 2 (Bloomberg) -- Asian currencies weakened, led by South Korea’s won, as signs economic growth in the world’s largest economy is cooling and another credit downgrade for Greece heightened risk aversion.

The won, Malaysia’s ringgit and the Singapore dollar snapped five-day winning streaks, while Thailand’s baht and the Philippine peso retreated from two-week highs. The MSCI Asia- Pacific Index of regional stocks tumbled 1.8 percent after the Standard & Poor’s 500 Index of U.S. shares slumped yesterday by the most since August. U.S. manufacturing expanded in May at the slowest pace since September 2009 and employers hired less than a quarter of the workers that economists had forecast.

“The U.S. economic slowdown raises concern about exports and growth in Asia,” said Tohru Nishihama, an economist at Dai- ichi Life Research Institute Inc. in Tokyo. “Investors’ risk appetite is deteriorating, leading to a sell-off in Asian currencies.”

The won fell 0.6 percent to 1,080.85 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The ringgit and the Singapore dollar declined 0.5 percent to 3.0205 and S$1.2369, respectively. Taiwan’s dollar dropped 0.3 percent to NT$28.785 and the peso slipped 0.3 percent to 43.26.

The U.S. Institute for Supply Management’s factory index fell last month to 53.5 from 60.4, less than the 57.1 median estimate of economists surveyed by Bloomberg. Employers added 38,000 workers to payrolls, the least in eight months, according to data released yesterday.

Greek Downgrade

Moody’s Investors Service cut Greece’s credit rating three steps to Caa1 yesterday, putting it on a par with Cuba. Investors demanded 2.93 percentage points in extra yields over Treasuries to own emerging-market debt yesterday, according to JPMorgan Chase & Co. That’s the highest risk premium since August 2010.

Weaker data and the Greece downgrade “are prompting investors to avoid buying riskier assets, weakening the won,” said Cho Young Bok, a currency dealer at Daegu Bank in Seoul. “Some exporters are trying to take profits after the won fell, repatriating their income.”

Economic reports this week showed manufacturing growth in China and Singapore eased in May, and gross domestic product expanded last quarter at a slower pace in India and the Philippines.

The yuan fell 0.07 percent to 6.4828 per dollar, after a three-day rally to a 17-year high. The central bank fixed its reference rate at 6.4886 today, the first time in seven days that it had been set weaker.

Elsewhere, India’s rupee fell 0.2 percent to 44.9475 per dollar and the baht weakened 0.1 percent to 30.31. Financial markets in Indonesia were closed today for a public holiday.

--With assistance from Seyoon Kim in Seoul. Editors: Andrew Janes, Simon Harvey

%VND %KRW %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY

To contact the reporter 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.


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