Bloomberg News

Asian Currencies Complete Weekly Drop as Growth Forecasts Cut

June 22, 2012

Asian currencies had a weekly loss, led by the Indian rupee and Thailand’s baht, as signs the world economy is deteriorating dimmed the outlook for regional exports and curbed demand for emerging-market assets.

Taiwan’s central bank left interest rates unchanged yesterday and Governor Perng Fai-nan said there is a high risk of the global outlook worsening. Bank of Korea Deputy Governor Kim Jun Il said yesterday the monetary authority may lower its projection for the nation’s expansion in July. Malaysia forecast this week that its services output growth will slow to 5.1 percent this year from 6.8 percent in 2011. Manufacturing in China, Asia’s biggest economy, may shrink for an eighth month in June, according to preliminary data released yesterday.

“Concern about Europe’s debt crisis is lingering in the market and on top of that there’s growing worry about the global economic slowdown,” said Kozo Hasegawa, a Bangkok-based trader at Sumitomo Mitsui Banking Corp. “Slowdowns in Europe, China and the U.S. will clearly impact Asian exports and the regional currencies will continue to see some selling pressure.”

The Indian rupee weakened 3.1 percent this week to 57.2550 per dollar as of 2 p.m. in Mumbai and reached a record low of 57.3275 today, according to prices compiled by Bloomberg. Thailand’s baht slid 1.1 percent to 31.81, while Malaysia’s ringgit declined 0.9 percent to 3.1915. The Bloomberg-JPMorgan Asia Dollar Index fell 0.4 percent.

India Rating

The Federal Reserve lowered its 2012 U.S. growth forecast this week to a range of 1.9 percent to 2.4 percent, from an April projection of 2.4 percent to 2.9 percent. European finance ministers meeting in Luxembourg yesterday disagreed on how to contain the region’s debt crisis, with creditor countries refusing leniency for Greece to meet deficit-cut targets. Moody’s Investors Service downgraded 15 global banks yesterday, including JPMorgan Chase & Co., citing their exposure to financial market volatility.

“We have to wait and see what happens in Europe and the U.S. and whether China can achieve a soft landing,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “We will see risk aversion. There is anxiety regarding the financial sector worldwide after the U.S. banks were downgraded.”

The rupee fell this week after Fitch Ratings cut India’s sovereign credit-rating outlook to negative on June 18, joining Standard & Poor’s in signaling the country is at risk of losing its investment-grade status.

Thai Export Growth

The Reserve Bank of India unexpectedly left the benchmark repurchase rate at 8 percent on the same day as the fastest inflation among the biggest emerging markets deterred policy makers from lowering borrowing costs.

The baht had its largest weekly decline in a month. The Bank of Thailand cut its 2012 export-growth forecast to about 8 percent from 9 percent due to the crisis in Europe, Songtham Pinto, director of the central bank’s office of macroeconomics, said June 19.

Exports gained 0.65 percent in May after a decline of 3.67 percent in April, while imports climbed 8 percent following a 7.87 percent increase, according to median estimates of economists in Bloomberg News surveys before government data next week.

Elsewhere, Indonesia’s rupiah dropped 1.1 percent this week to 9,488 per dollar, the Philippine peso fell 0.5 percent to 42.450 and Taiwan’s currency slipped 0.2 percent to NT$29.968. China’s yuan traded at 6.3642, little changed from 6.3651 at the end of last week. South Korea’s won advanced 0.8 percent to 1,157.05.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net.

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


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