Bloomberg News

Rupee Leads Drop in Asian Currencies on Global Recovery Concern

March 29, 2012

Asian currencies fell after worse- than-expected economic data from the U.S. and Europe heightened concern the global recovery is losing momentum.

India’s rupee led declines with the biggest drop in a week as the MSCI Asia-Pacific Index of shares fell the most since March 21. Official reports showed the U.K. economy shrank more than previously estimated in the last quarter of 2011, while expansion in France trailed estimates. Orders placed with U.S. factories for durable goods rose 2.2 percent in February, less than the 3 percent gain forecast in a Bloomberg survey of economists.

“The data came with some disappointment and was not conducive for risky assets to perform,” said Choong Yin Pheng, manager for economic and bond research at Hong Leong Bank Bhd. in Kuala Lumpur. “The prospect of money flowing back to the U.S. means Asian currencies are going to face some temporary weakness.”

The rupee slumped 0.6 percent to 51.095 per dollar as of 1:45 p.m. in Mumbai, according to data compiled by Bloomberg. Thailand’s baht depreciated 0.3 percent to 30.86, South Korea’s won fell 0.1 percent to 1,136.90 and Malaysia’s ringgit dropped 0.1 percent to 3.0655.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, lost 0.1 percent. The gauge is still up 1.2 percent this year, the most in three quarters. Its 60-day historical volatility was little changed at 3.38 percent.

Slower Exports

“With demand from the developed world uncertain, and concerns over China’s hard landing not going away, emerging- market assets are under pressure,” Darius Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong, wrote in a note to clients today. “Such an environment is negative for emerging-market exports and growth prospects.”

The won touched a two-month low earlier this week. A government report on April 1 may show exports increased 1.8 percent in March from a year earlier, compared with a revised 20.6 percent gain in February, according to the median estimate in a Bloomberg survey.

The ringgit has slumped 2.5 percent this month, the second- worst performance among Asia’s 11 most-traded currencies, after official data showed annual export growth slumped to 0.4 percent in January from 6.1 percent in December.

China PMI Data

China’s yuan fell 0.01 percent to 6.3069 per dollar, according to China Foreign Exchange Trade System, after the People’s Bank of China weakened its daily reference rate for a second day. An index (MXAP) measuring China’s manufacturing growth declined to 50.6 in March from 51 in February, according to the median forecast in a Bloomberg News survey before data due April 1. Fifty is the dividing line between expansion and contraction.

“Investors are waiting for the PMI data for a clearer picture on the economy,” said Kenix Lai, a Hong Kong-based currency analyst at Bank of East Asia Ltd. “There will be less appreciation pressure for the yuan if the economy slows further.”

Elsewhere, Indonesia’s rupiah dropped 0.1 percent to 9,199 per dollar and Taiwan’s dollar were little changed against the greenback at NT$29.582. Vietnam’s dong strengthened 0.6 percent to 20,725.

To contact the reporters 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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