Bloomberg News

Asian Currencies Drop as Slowing Growth Dims Export Outlook

June 08, 2011

June 8 (Bloomberg) -- Asian currencies weakened, led by Malaysia’s ringgit and Singapore’s dollar, on concern slowing economic growth will temper demand for the region’s exports.

The Bloomberg-JPMorgan Asia Dollar Index dropped 0.2 percent as Asian stocks declined for a fourth day in five. U.S. equities retreated yesterday after Federal Reserve Chairman Ben S. Bernanke said the economic recovery was “frustratingly slow” and offered no hints on a new stimulus program. The International Monetary Fund said its 26 billion-euro ($38 billion) loan to Portugal “entails important risks” and Germany said bondholders must share a second bailout package for Greece.

“We see growing concern about an economic slowdown in Japan and the U.S. and that’s not good for Asia’s export outlook,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “Stock markets are not doing well.”

The ringgit weakened 0.3 percent to 3.0170 per dollar as of 4:46 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. Thailand’s baht slipped 0.2 percent to 30.33 and the Philippine peso fell 0.2 percent to 43.243.

Malaysia’s currency also dropped on concern slowing growth will damp the outlook for further interest-rate increases. Bank Negara Malaysia next reviews borrowing costs on July 7.

“Confidence on global economic growth appears to have ebbed and that is putting pressure on emerging-market assets,” said Manokaran Mottain, a senior economist at AmResearch Sdn. in Kuala Lumpur. “This may raise the odds of Bank Negara holding off a rate increase.”

Thai Elections

A report today showed South Korea’s economy grew 1.3 percent in the first quarter from the preceding three months, slower than the 1.4 percent estimated in April. Taiwan’s exports rose 9.5 percent in May from a year earlier, the least since a 4.6 percent contraction in October 2009, official data showed today.

Reports showing weakness in the U.S. economy, including an increase in the unemployment rate to 9.1 percent in May, the highest this year, has raised the odds the Fed will hold its benchmark interest rate near zero into next year. New York Fed President William Dudley said the U.S. recovery remains “distinctly subpar.”

The Thai baht declined after overseas investors cut their holdings of local shares before elections on July 3. Global funds sold $163 million more Thai stocks than they bought in the first two days of this week, according to exchange data.

China’s yuan strengthened 0.08 percent to 6.4757 per dollar and reached 6.4755, the strongest level in 17 years, after the central bank fixed its reference rate at the highest since July 2005. Inflation pressure in Asia’s biggest economy is “relatively large,” Xu Xianping, vice chairman of the National Development and Reform Commission, said today.

Rupiah Touches High

Indonesia’s rupiah earlier touched a seven-year high of 8,499 per dollar, and last traded unchanged from yesterday at 8,518, on speculation the central bank will favor appreciation to help tame inflation. All 14 economists surveyed by Bloomberg expect Bank Indonesia to hold its benchmark interest rate at 6.75 percent tomorrow.

“We expect Bank Indonesia to opt for non-policy-rate tools such as allowing the rupiah to appreciate,” said Jennifer Kusuma, a Singapore-based rates strategist at Standard Chartered Plc. “There’s room to pause in the next one to two months” while inflation eases, she said.

Elsewhere, Taiwan’s dollar advanced 0.1 percent to NT$28.72 against its U.S. counterpart and South Korea’s won gained 0.2 percent to 1,080.10. Vietnam’s dong was little changed at 20,565 as was India’s rupee at 44.68.

--With assistance from Yumi Teso in Bangkok and Elffie Chew in Kuala Lumpur. 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.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


Cash Is for Losers
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus