Asian Currencies Weaken on Risk Aversion; Korean Won Advances
By Kim Kyoungwha and Ron Harui
Dec. 24 (Bloomberg) — Asian currencies fell after reports indicating a global recession is deepening sapped demand for emerging-market assets. South Korea’s won strengthened on speculation the nation’s central bank was supporting the currency, the region’s biggest loser this year.
The MSCI Asia Pacific Index fell 1.2 percent, extending this year’s drop to 45 percent, the steepest annual slide in the benchmark’s two-decade history. The Philippine peso and the Indian rupee both slipped for a fourth day, their longest losing streaks in more than a month.
“The recovery in risk-taking we have seen since the start of the month has weakened with global stock markets tumbling,” said Jerry Yoshikoshi, a market analyst with at Sumitomo Mitsui Banking Corp. in Singapore. “Prospects for Asian currencies aren’t getting any better.”
The peso lost 0.2 percent to 47.53 per dollar as of 3:27 p.m. in Manila, where financial markets are open today for the last time this year. It’s dropped 14 percent in 2008, the worst performance since 2000. India’s rupee slid as much as 0.9 percent to 49.19 before paring losses to trade at 48.7975.
A U.S. government report today may show consumer spending fell in November for a record fifth month, according to economists surveyed by Bloomberg News. Confidence among Japanese manufacturers dropped the most on record this quarter, according to an official survey published today. The two economies, the world’s biggest, are both in recession.
Weak Exports
The yen rose against the euro and the dollar on speculation stock-market declines will prompt Japanese investors to repatriate funds invested overseas. The yen rose to 126.33 per euro in Tokyo from 126.72 late yesterday in New York. Against the dollar, it traded at 90.39 from 90.98. Japan’s currency reached a 13-year high of 87.14 on Dec. 17.
“Many of the Asian economies are being affected by the global slowdown,” said Stephen Schwartz, a currency strategist at Merrill Lynch Asia Pacific Ltd. in Hong Kong, in an interview with Bloomberg Television. “It’s the weak cyclical position combined with very weak export numbers. What that means for Asian currencies is weakness in the first half of the year.”
Japan, China, India and South Korea — Asia’s four biggest economies — have all reported drops in exports this month. Taiwan’s export orders, indicative of shipments in one to three months, plunged a record 29 percent in November, according to a government report released late yesterday.
Taiwan’s dollar was at NT$33.04 per U.S. dollar in Taipei, from NT$33.085 late yesterday. It earlier fell as much as 0.3 percent to NT$33.183.
Weaker Ringgit
Malaysia’s ringgit fell 0.1 percent to 3.4725 against the dollar in Kuala Lumpur. It reached 3.6474 on Dec. 5, the lowest in two years.
The currency has declined 4.8 percent this year, headed for the biggest annual loss since 1997. The government pegged the ringgit against the dollar in September 1998, during the Asian financial crisis, and maintained a fixed exchange rate until July 2005.
Korea’s won strengthened, ending a two-day decline, on speculation the central bank bought the currency to stem losses.
The won has appreciated 12 percent in December, after falling every month since July, as Korea signed swap deals with the U.S., China and Japan, giving access to dollars to help ease a funding shortage for local companies. The currency is still down 29 percent this year, its worst annual performance since the Asian financial crisis.
Won Intervention
“There’s no other reason to explain today’s move than the government’s intervention,” said Kim Yule, a currency dealer with BNP Paribas in Seoul. “Otherwise, the market is in year- end mood with no big appetite for trading.”
The won rose 2.4 percent to 1,306.50 in Seoul, according to Seoul Money Brokerage Services Ltd. Its decline this year is the worst among the 10 most-traded in Asia excluding the yen.
Governments and central banks intervene by arranging purchases or sales of currencies to influence the exchange rate.
Indonesia’s rupiah gained 1.2 percent to 11,098 per dollar. The Chinese yuan and Vietnam’s dong were little changed at 6.8492 and 16,984.50 respectively. Thailand’s baht fell 0.1 percent to 34.65 and Singapore’s dollar was little changed at S$1.4462.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net
Last Updated: December 24, 2008 02:30 EST