Sept. 20 (Bloomberg) -- Asian currencies weakened, with South Korea’s won and Malaysia’s ringgit reaching 2011 lows, on concern Europe’s worsening debt crisis will spur an exodus from emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index fell to a six- month low after Italy’s credit rating was cut one level to A by Standard & Poor’s. Taiwan said today export orders, an indication of shipments in the next one to three months, gained less than economists estimated, while a report this week may show Thailand’s overseas sales increased by less than the previous month, according to economists surveyed by Bloomberg.
The won dropped 1 percent to 1,148.90 per dollar as of 3 p.m. in Seoul, according to data compiled by Bloomberg. India’s rupee fell 0.5 percent to 48.065 and Taiwan’s dollar dropped 0.4 percent to NT$29.888.
“Risk aversion has gone to the next level and the losses are justified given that European officials have not been able to reassure the markets on the default risk,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “Asian assets are getting sold off in favor of cash.”
The Asian Development Bank cut its 2011 growth forecast for Asia excluding Japan to 7.5 percent from an April estimate of 7.8 percent, according to a report issued on Sept. 14. Global funds sold $2.9 billion more Indonesian, South Korean and Taiwanese equities than they bought this month through yesterday, exchange data show.
The rupiah has weakened more than 5 percent this month and dropped below the 9,000 per dollar level for the first time since February today. Indonesia is preparing a stimulus package that it may implement in the first half of 2012 should the global economy deteriorate and hurt growth, the government said Sept. 15.
South Korea’s financial regulator will strengthen market monitoring and take additional stabilization steps if needed, the Financial Services Commission said today. The regulator is watching stock market volatility and rapid outflows of overseas funds, it said in an e-mailed copy of a report submitted to parliament. The commission will regularly review whether banks are meeting foreign-currency liquidity guidance and limits on foreign-currency forward contracts, it said.
The currency market has reacted “excessively” to concerns about the global economy, Deputy Finance Minister Choi Jong Ku said today.
“Italy’s credit rating cut is boosting safe-haven demand,” said Kim Ji Myoung, a currency trader at Korea Development Bank in Seoul. “Currency declines will depend on the amount of government intervention and exporters’ selling dollars to convert income.”
Thailand’s baht dropped for an 11th day, the longest losing streak since June 2008. The currency touched the weakest level in more than two months before a report that’s expected to show export growth slowed to 27.4 percent in August from 38.3 percent in July, according to the median estimate of economists in a Bloomberg survey.
“Europe’s crisis is spurring sales of riskier assets such as stocks and emerging-market currencies,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Asia will be hit through exports as Europe is a major buyer of goods from here. The region’s currencies will remain under downward pressure for the time being.”
Elsewhere, Thailand’s baht, Indonesia’s rupiah and the Philippine peso were little changed at 30.55, 9,023 and 43.472, respectively. The ringgit traded at 3.1250 from 3.1238 yesterday after weakening to this year’s low of 3.1425. China’s yuan was steady at 6.3843.
--With assistance from David Yong in Singapore and Jiyeun Lee in Seoul. Editors: Andrew Janes, Simon Harvey
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