Bloomberg News

Asian Currencies Weaken, Led by Rupee, After Weak U.S. Data

September 05, 2012

India’s rupee and Malaysia’s ringgit led declines in Asian currencies on concern that a slump in U.S. manufacturing will deter risk-taking ahead of a European Central Bank policy meeting tomorrow.

The euro weakened against the dollar even after ECB President Mario Draghi said this week that the bank’s primary mandate compels it to intervene in bond markets to ensure the common currency’s survival. U.S. factory output shrank last month by the most since July 2009, a report showed yesterday.

“The weak U.S. data is used as an excuse for position adjustment from the recent declines in the dollar before big events like ECB and jobs data in the U.S.,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “The drop in regional currencies is limited as funds will eventually come to Asia, where domestic demand remains solid.”

The rupee slipped 0.5 percent to 55.9410 per dollar as of 2:12 p.m. in Mumbai, and the ringgit declined 0.4 percent to 3.1210, according to data compiled by Bloomberg. The Thai baht dropped 0.3 percent to 31.28 and South Korea’s won fell 0.2 percent to 1,135.85.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, was set for its lowest close in almost a week.

The U.S. Institute for Supply Management’s factory index fell to 49.6 last month from 49.8 in July, the Tempe, Arizona- based group said. Economists in a Bloomberg survey projected a reading of 50, which is the dividing line between expansion and contraction. Measures of orders and production dropped to three- year lows.

Ringgit, Won

The ringgit dropped the most in more than a week ahead of data forecast to show that export growth slowed in Southeast Asia’s third-largest economy.

Overseas shipments rose 3.5 percent in July from a year earlier, after climbing 5.4 percent in June, according to the median estimate of economists in a Bloomberg News survey before a government report due Sept. 7.

“Slowing export growth will be a concern, especially after the ISM index in the U.S. disappointed yesterday,” said Philip Wee, a senior currency economist in Singapore at DBS Group Holdings Ltd.

The won weakened for a second day as the Kospi (KOSPI) Index of shares had its lowest close since Aug. 3. South Korea plans to announce economic stimulus measures next week without increasing the budget, Finance Minister Bahk Jae Wan said yesterday.

“The euro declining before the ECB meeting and local share losses after U.S. manufacturing data are all contributing to risk-aversion sentiment in the market, weakening the won,” said Cho Young Bok, a Seoul-based currency trader for Daegu Bank.

Reserves, Exports

South Korea’s foreign-exchange reserves rose $2.53 billion to a record $316.88 billion in August, the biggest increase in six months, according to central bank figures released today.

The baht snapped three days of gains after the U.S. manufacturing report. The U.S., Thailand’s third-largest export market, bought about 10 percent of goods shipped from the Southeast Asian nation in the first seven months of this year. Overseas sales, which account for about two-thirds of the Thai economy, decreased 3.9 percent in July from a year earlier after a 2.3 percent slide in June, according to central bank data.

Elsewhere in Asia, the Philippine peso dropped 0.2 percent to 41.978 per dollar, China’s yuan traded at 6.3492 compared with 6.3473 yesterday, while Taiwan’s dollar was little changed at NT$29.905. Indonesia’s rupiah was at 9,575 versus 9,571.

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

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


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