Bloomberg News

Asian Currencies Decline as China’s Manufacturing Growth Cools

November 01, 2011

Nov. 1 (Bloomberg) -- Singapore’s dollar and Malaysia’s ringgit led a decline in Asian currencies after a report showed manufacturing growth in China slowed, dimming the outlook for regional exports.

The ringgit and South Korea’s won retreated from seven-week highs after the Purchasing Managers’ Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. Asian stocks headed for the first two-day loss in almost a month as U.S. broker MF Global Holdings Ltd. filed for bankruptcy after investing in sovereign debt of some European nations.

“We expect declines in regional currencies as markets are likely to suffer from outflows of portfolio capital,” said Dariusz Kowalczyk, a currency strategist in Hong Kong at Credit Agricole CIB. “The weak mood reflects a lot of negative factors such as the MF bankruptcy and concerns over the euro-zone funding package.”

Singapore’s dollar weakened 0.8 percent to S$1.2571 against its U.S. counterpart as of 11:06 a.m. local time, according to data compiled by Bloomberg. The ringgit dropped 0.7 percent to 3.0965, the won fell 0.2 percent to 1,112.83 and Taiwan’s dollar declined 0.2 percent to NT$30.

Asian currencies rose in October by the most since September 2010 as an agreement among European leaders on a package to resolve the debt crisis boosted confidence. Overseas investors were net buyers of a combined $4.2 billion of shares in Taiwan, South Korea, Thailand and Indonesia last month, according to stock exchange data.

MF Bankruptcy

Leaders from the Group of 20 countries convene a meeting on Nov. 3-4 in Cannes, France, a week after euro-area authorities pledged to enhance their rescue fund to 1 trillion euros ($1.4 trillion). Greece has now pledged to put the European Union’s debt accord for the nation to a referendum, risking a default if rejected by voters and sending regional equities lower.

The MSCI Asia-Pacific Index of shares slipped 0.7 percent, adding to a 2.3 percent loss yesterday. MF Global filed for protection from creditors yesterday, making it the fifth-largest bankruptcy among financial-industry public companies.

The PMI data from the China Federation of Logistics and Purchasing dropped to the lowest level since February 2009, raising speculation the central bank will ease monetary policy. A separate index compiled by HSBC Holdings Plc and Markit Economics rose to 51.0 in October from 49.9 in September. Readings of 50 or above signal expansion.

Export Demand

China including Hong Kong is the biggest export market for South Korea, Malaysia and Taiwan.

“China’s data raised concern demand for exports from the rest of Asia will cool,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo.

The yuan was little changed at 6.3532 per dollar in Shanghai, according to China Foreign Exchange Trade System. The currency dropped 0.11 percent to 6.3975 in Hong Kong. The central bank fixed its reference rate 0.09 percent weaker at 6.3293 today.

Elsewhere, Indonesia’s rupiah fell 0.5 percent to 8,895 per dollar and Thailand’s baht weakened 0.3 percent to 30.83. The Philippines is closed for a holiday.

--With assistance from Yumi Teso in Bangkok and Lilian Karunungan in Singapore. Editors: Simon Harvey, Ven Ram


To contact the reporter on this story: David Yong in Singapore at

To contact the editor responsible for this story: Sandy Hendry at

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