Nov. 18 (Bloomberg) -- Asian currencies declined, led by Indonesia's rupiah and South Korea's won, on concern a global recession will damp demand for emerging-market assets.

Nine of Asia's 10 most-traded currencies in Asia outside of Japan fell against the greenback today as the MSCI Asia-Pacific Index of shares slid 3.2 percent, extending this month's loss to 6.8 percent. The rupiah slumped to a decade-low after overseas investors sold more Indonesian shares than they bought on all but four trading days this month. Global funds also cut their holdings of Korean stocks for a sixth day, helping drive the won to its weakest level in three weeks.

``The worst of the violent adjustments of positions is over, but what's left is a great deal of pessimism about the global growth in 2009 and Asian currencies,'' said Sean Callow, a currency strategist with Westpac Banking Corp. in Sydney. ``It's hard to see a change in the sentiment any time soon.''

The rupiah fell as low as 12,225 per dollar, the weakest since September 1998, before trading down 1.3 percent at 12,000 as of 3:36 p.m. in Jakarta. The won slid 2.7 percent to 1,448, according to Seoul Money Brokerage Services Ltd.

The two currencies are this month's worst performers in Asia, having dropped 8.5 percent and 11 percent, respectively.

`Protracted Financial Crisis'

Indonesia's government yesterday reported the economy grew 6.1 percent from a year earlier in the three months through September, the slowest pace in six quarters. The benchmark Jakarta Composite share index dropped 4.1 percent today, set for its lowest close this month.

``The rupiah has been trying to break 12,000 all week as the markets see a protracted financial crisis,'' said Iwan Ridwan Gunandar, a currency dealer at PT Bank CIMB Niaga. ``Stocks are declining every day because of the global slowdown.''

Indonesia's central bank won't allow the rupiah to drop to an ``unrealistic,'' level, Governor Boediono said today. The rupiah is declining because of dollar demand from importers and companies, he said.

South Korea's Kospi index fell 3.9 percent to 1,036.16, the lowest close since Oct. 29, and the won weakened for a sixth day.

``It may take some time until the market sees stability because fears of a global recession are fueling sentiment for a strong dollar,'' said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul.

The Bank of Korea sold $2 billion of the U.S. currency directly to local banks, as planned, at its weekly auction in the foreign-exchange swap market today.

The central bank said it decided not to disclose the swap point because revealing it could ``increase market volatility.'' Three-month swap agreements were sold with a swap point of minus 13.24 at an auction a week ago. The point shows the difference between forward and spot exchange rates, and a decline signals dollar liquidity is worsening.

Risk Aversion

The dollar rose against the yen on speculation overseas investors bought more of the safest U.S. assets as the global economy entered a recession.

``We've got this pervasive risk aversion, and we are seeing dollar assets as attractive in a world permeated by fear,'' said Adam Carr, senior economist at ICAP Australia Ltd. in Sydney. ``I'm bullish on the U.S. dollar.''

The dollar climbed to 96.67 yen from 96.43 yen. It may strengthen to 105 yen by year-end, Carr forecast.

Elsewhere, Vietnam's dong and Malaysia's ringgit were little changed against the greenback, at 16,977 and 3.6020, respectively. Taiwan's dollar fell 0.2 percent to NT$33.234, India's rupee weakened 0.6 percent to 49.64 and the Thai baht dropped 0.1 percent to 35.02. The Singapore dollar fell 0.3 percent to S$1.5267.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net

Last Updated: November 18, 2008 03:44 EST