Asian Currencies Decline as Export Outlook Dims on China’s Factory Output

Singapore’s dollar and Malaysia’s ringgit led the biggest slide in Asian currencies in three weeks as a report showed manufacturing growth in China slowed, dimming the outlook for regional exports.

The ringgit and South Korea’s won retreated from seven-week highs after the Purchasing Managers’ Index fell to 32-month low of 50.4 last month from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. Asian stocks headed for the first two-day loss in almost a month after U.S. broker MF Global Holdings Ltd. filed for bankruptcy on losses from investing in the debt of some European nations.

“Slowing manufacturing in China may renew hard-landing fears,” said Dariusz Kowalczyk, a currency strategist in Hong Kong at Credit Agricole CIB. “The weak mood reflects a lot of negative factors such as the MF bankruptcy and concerns over the euro-zone funding package. Markets are likely to suffer from outflows of portfolio capital,”

Singapore’s dollar fell 2 percent to S$1.2720 against its U.S. counterpart as of 4:20 p.m. local time, according to data compiled by Bloomberg. The ringgit lost 1.7 percent to 3.1270, South Korea’s won weakened 0.3 percent to 1,113.88 and Taiwan’s dollar declined 0.5 percent to NT$30.086.

The Bloomberg-JP Morgan Asia Dollar Index dropped 0.5 percent, the most since Oct. 11. The gauge rallied 2.2 percent last month as an agreement among European leaders on a package to resolve the debt crisis boosted confidence. Overseas investors pumped $4.2 billion into stock markets in Taiwan, South Korea, Thailand and Indonesia last month, stock exchange data showed.

MF Bankruptcy

Leaders from the Group of 20 countries convene a meeting on Nov. 3-4 in Cannes, France, a week after euro-area authorities decided to enhance their rescue fund to 1 trillion euros ($1.4 trillion). Greece has now pledged to put the European Union’s debt accord for the nation to a referendum, risking a default if rejected by voters and sending regional equities lower.

The MSCI Asia-Pacific Index of shares slipped 2.1 percent, adding to yesterday’s 2.3 percent loss. MF Global filed for protection from creditors yesterday, making it the fifth-largest bankruptcy among financial-industry public companies.

“The signs are clearer and clearer that the economy’s slowing,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “There are lingering issues in Europe, and Asia’s growth outlook’s getting uncertain.”

The PMI data from the China Federation of Logistics and Purchasing dropped to the lowest level since February 2009. A separate index compiled by HSBC Holdings Plc and Markit Economics rose to 51.0 in October from 49.9 in September. Readings of 50 or above signal expansion.

Export Demand

China including Hong Kong is the biggest export market for South Korea, Malaysia and Taiwan.

“China’s data raised concern demand for exports from the rest of Asia will cool,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo.

The yuan was little changed at 6.3543 per dollar at the close in Shanghai, according to China Foreign Exchange Trade System. The currency dropped 0.2 percent to 6.4023 in Hong Kong. The central bank fixed its reference rate 0.09 percent weaker at 6.3293 today.

Elsewhere, Indonesia’s rupiah fell 0.5 percent to 8,895 per dollar and Thailand’s baht weakened 0.4 percent to 30.85. India’s rupee depreciated 1.1 percent to 49.21, headed for its worst loss since Oct. 20. Financial markets in Philippines are closed for a holiday.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

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

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