Bloomberg News

Won, Rupiah Lead Declines in Asia on Greek Referendum Concern

November 02, 2011

Nov. 2 (Bloomberg) -- Asian currencies dropped, led by Indonesia’s rupiah and South Korea’s won, on concern Greece’s planned referendum on the European Union rescue plan will worsen the debt crisis and cut appetite for emerging-market assets.

The rupiah slipped for a third day and Korea’s currency lost the most in two weeks as the MSCI Asia-Pacific Index of regional shares hit the lowest level since Oct. 24. The Greek vote, if rejected, could jeopardize the next installment of 8 billion euros ($11 billion) of emergency aid funds from the EU and International Monetary Fund later this month. A Chinese manufacturing purchasing managers’ index fell to a 32-month low, data showed yesterday.

“The market will remain under pressure in the interim until the Greek referendum goes through” said Roy Teo, a currency strategist at ABN Amro Private Bank in Singapore. “The PMI manufacturing numbers didn’t help with the current bearish sentiment.”

The rupiah declined 0.4 percent to 8,930 per dollar as of 4:03 p.m. in Jakarta, according to data compiled by Bloomberg. The won slipped 0.7 percent to 1,121.90 at the close in Seoul and the Philippine peso declined 0.4 percent to 42.78 following a two-day holiday.

Greek Prime Minister George Papandreou said yesterday voters will give him support at the referendum to forge ahead with economic reforms. An opinion poll published Oct. 29 showed 59 percent of Greeks see the latest EU debt accord on a new bailout and debt writedown as negative or probably negative.

‘Maintain Order’

The proposal for a vote “surprised all of Europe,” French President Nicolas Sarkozy said yesterday, before leaders from the Group of 20 nations meet on Nov. 3-4 in Cannes, France. The U.S. Federal Open Market Committee is expected to maintain a near-zero benchmark interest rate after a policy meeting concludes today, according to economists surveyed by Bloomberg.

“Renewed uncertainties over Greece’s debt issues will drag the won down,” said Lee Jung Hyun, a currency dealer at Industrial Bank of Korea in Seoul. “Expectations for the G-20 summit and the FOMC meeting this week may limit currency declines.”

Taiwan’s dollar weakened for a third day as central bank Governor Perng Fai-nan pledged to “maintain order” in the exchange rate, in response to questions from lawmakers in parliament today. The currency dropped 0.1 percent to NT$30.118 against the greenback, according to Taipei Forex Inc.

Thai Flooding

Thailand’s baht gained 0.3 percent to 30.81, reversing an earlier decline of 0.2 percent, as foreign investors bought local bonds and stocks. The Bank of Thailand lowered its 2011 economic growth forecast last week to 2.6 percent from 4.1 percent amid the worst floods in five decades.

“It’s probably the fund inflows that supported the baht on a day-to-day basis,” said Minoru Shioiri, chief manager of foreign-exchange trading at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “I don’t see the baht rising sharply from here as the floods may slow production and exports.”

Elsewhere, China’s yuan weakened 0.05 percent to 6.3573 per dollar in Shanghai. The Vietnamese dong and Malaysia’s ringgit were little changed at 21,009 and 3.1430, respectively. India’s rupee rose 0.2 percent to 49.1912.

--With assistance from Andrea Wong in Taipei and Jiyeun Lee 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

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


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