Bloomberg News

Asian Currencies Decline for Fifth Week on Europe Debt Woes

March 22, 2013

Asian currencies dropped for a fifth week, the longest losing streak since June, as Cyprus’s lawmakers debated measures needed to get a bailout, fueling concern Europe’s debt crisis will worsen.

Overseas investors pulled $2.4 billion from Taiwanese, South Korean and Thai stocks in the first four days of this week, exchange data show. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, dropped 0.15 percent since March 15. Cypriot lawmakers after Asian trading hours yesterday approved capital controls and legislation to wind down banks as they scrambled to secure a European bailout and avert a financial collapse of the Mediterranean island.

“Investors remain concerned the Cyprus issue hasn’t been resolved, which is keeping them from investing in emerging- market assets,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul.

The won fell 0.7 percent this week to close at 1,119.28 per dollar in Seoul, according to data compiled by Bloomberg. Indonesia’s rupiah declined 0.4 percent to 9,743, the Philippine peso dropped 0.6 percent to 40.850 and Taiwan’s dollar lost 0.5 percent to NT$29.909.

The won touched the weakest level since September on March 20 after Eun Sung Soo, director general at the finance ministry, said South Korea will consider “various” financial taxes if needed to curb capital flows. The Kospi Index of shares slipped 1.9 percent this week as foreign investors sold more local stocks than they bought in the six days through March 21.

Holdings Cut

The rupiah completed a third weekly decline after overseas investors cut 2.1 trillion rupiah ($215 million) from their Indonesian sovereign debt holdings since ownership reached a record on March 14, according to finance ministry data. The 2013 budget shortfall may exceed 2 percent of gross domestic product due to high subsidy costs, compared with the 1.65 percent target, Finance Minister Agus Martowardojo said March 19.

“The rupiah’s weakening is driven by negative sentiment on Indonesia,” said Fahrudin Haris Prastowo, a foreign-exchange trader at PT Bank Rakyat Indonesia in Jakarta. “Inflation will likely accelerate and the budget deficit is still burdened by subsidies, which is causing concern among foreign investors.”

Taiwan’s dollar fell for a fourth week on signs the island’s economic recovery is slowing. Export orders slumped last month by 14.5 percent from a year earlier, more than the 3 percent drop economists surveyed by Bloomberg estimated, official data showed March 20. Industrial production probably contracted last month for the first time since June, according to another Bloomberg survey before a report due March 25.

Yuan Record

China’s yuan touched a 19-year high on March 20 during U.S. Treasury Secretary Jacob J. Lew’s visit to Beijing amid optimism the economy is improving. A preliminary reading for Chinese manufacturing this month was 51.7, according to a report on March 21 from HSBC Holdings Plc and Markit Economics. That compares with the median estimate of 50.8 in a Bloomberg survey and a final reading of 50.4 in February. The currency was little changed at 6.2122 per dollar this week.

Elsewhere in Asia, India’s rupee fell 0.6 percent this week to 54.3425 per dollar, according to data compiled by Bloomberg. Thailand’s baht rallied 0.9 percent to 29.28, Malaysia’s ringgit strengthened 0.4 percent to 3.1121 and Vietnam’s dong rose 0.1 percent to 20,940.

To contact the reporters on this story: Fion Li in Hong Kong at fli59@bloomberg.net; Seyoon Kim in Seoul at skim7@bloomberg.net

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


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