Bloomberg News

Asian Currencies Drop This Week as Greece Crisis Damps Demand

June 17, 2011

June 18 (Bloomberg) -- Asian currencies declined this week, led by the biggest five-day drop in Indonesia’s rupiah this year, as concern that Greece will default on its debt reduced demand for emerging-market assets.

The MSCI Asia-Pacific Index of regional stocks fell to its lowest level in almost three months yesterday as overseas investors sold $1.5 billion more equities than they bought this week in South Korea, Taiwan and Thailand, exchange data showed. European Union finance ministers will meet tomorrow after they failed to agree to a German-led push for bondholders to shoulder part of the cost of a new aid package for Greece this week.

“The main driver for the decline in Asian currencies has been the unfolding European debt crisis,” said Mirza Baig, a Singapore-based currency strategist at Deutsche Bank AG.

The rupiah slid 0.9 percent this week to 8,596 per dollar in Jakarta yesterday, according to data compiled by Bloomberg. Malaysia’s ringgit lost 0.4 percent to 3.0315 and the Philippine peso weakened 0.7 percent to 43.60.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, advanced 0.1 percent this week. It touched 117.85 on June 16, the lowest level since May 26. Jean-Claude Juncker, who leads the group of euro-area finance ministers, was cited in the German newspaper Tagesspiegel as saying a “hard haircut” for investors in Greek securities would risk contagion to other European countries.

Finance Minister Fired

Greek Prime Minister George Papandreou fired his finance minister in a Cabinet overhaul yesterday aimed at fending off a party rebellion and ensuring the passage of austerity measures needed for a bailout.

“Concern about global growth and the euro debt issue is all coming together and weighing on investors’ minds,” said Prakriti Sofat, an economist at Barclays Capital in Singapore.

Thailand’s baht touched its weakest level in more than three months yesterday on concern elections slated for July 3 will spark protests. The Thai vote will pit Prime Minister Abhisit Vejjajiva’s Democrat party against the Pheu Thai party led by Yingluck Shinawatra, the sister of Thaksin Shinawatra who was ousted in a 2006 coup.

The baht dropped 0.6 percent to 30.57 per dollar this week and reached 30.66 yesterday, the lowest level since Feb. 28.

“When you closely follow the situation surrounding the Thai election, you see some news and comments that raise concern about potential unrest,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok.

Elsewhere, South Korea’s won rose 0.2 percent to 1,081.50 per dollar this week and Singapore’s currency dropped 0.2 percent to S$1.2346, according to data compiled by Bloomberg. Taiwan’s dollar slipped 0.6 percent to NT$28.95 and India’s rupee declined 0.3 percent to 44.87.

--With assistance from Yumi Teso in Bangkok. Editors: Simon Harvey, Andrew Janes

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

To contact the reporter on this story: Khalid Qayum in Singapore at kqayum@bloomberg.net

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


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