Bloomberg News

Asian Currencies Weaken as Greece Concern Lingers and Oil Rises

February 22, 2012

Feb. 22 (Bloomberg) -- Asian currencies fell for a second day, led by South Korea’s won and Indonesia’s rupiah, after fresh financial aid for Greece failed to allay concern Europe’s debt crisis will slow global growth.

The won snapped a three-day advance after euro-area finance ministers handed Greece a 130 billion-euro ($172 billion) lifeline to avoid a March bankruptcy. Oil prices reached a nine- month high yesterday, stoking speculation inflation will accelerate and potentially limit the scope for monetary easing. China’s manufacturing probably contracted for a fourth month in February, an HSBC Holdings Plc preliminary gauge indicated.

“The market is relieved but still skeptical about the implementation progress in Greece,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “There is also renewed worry about the high oil prices, which are a threat to growth.”

The won declined 0.3 percent to 1,126 per dollar at the close in Seoul, according to data compiled by Bloomberg. The rupiah weakened 0.1 percent to 9,059 in Jakarta. The Bloomberg- JPMorgan Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, was little changed after losing as much as 0.1 percent.

Bank of England Deputy Governor Charlie Bean said yesterday Greece’s second bailout may not be enough to end the debt crisis. Economists at Citigroup Inc. and Commerzbank AG said the debt-stricken nation may fail to deliver on promised austerity cuts amid social unrest and looming elections.

Oil Supply

Oil for April delivery reached $106.10 per barrel, the highest level since May 5, on concern supply will decline after Iran cut exports to France and Britain on Feb. 20, preempting a European Union ban. Policy makers in Indonesia, the Philippines and Thailand have lowered benchmark interest rates this year to revive economic growth, while China and India have cut banks’ reserve-requirement ratios in the past three months.

“One of the main concerns in 2012 is essentially imported inflation rising in Asia, essentially from the increase in oil prices,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore.

The Thai baht bucked the weakening trend, advancing for a fourth day as local stocks rose to a 15-year high. Global investors bought $1.2 billion more local stocks than they sold this month and purchased a net $3.6 billion of government bonds, stock exchange and Thai Bond Market Association data show. The currency appreciated 0.5 percent to 30.59 per dollar, the strongest level since Nov. 7.

“Funds are coming into Thailand a lot so far this year, providing support for the baht,” said Disawat Tiaowvanich, a currency trader at Bangkok Bank Pcl.

Elsewhere, the Singapore dollar slipped 0.2 percent to S$1.2584 versus the greenback. Taiwan’s dollar and China’s yuan were little changed at NT$29.582 and 6.2960, respectively. India’s rupee gained 0.1 percent to 49.233 and the Philippine peso erased losses to trade little changed at 42.63.

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

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

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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