Peso, Rupiah Lead Decline in Asian Currencies on Greek Referendum Concern

The Philippine peso and Indonesia’s rupiah led declines in Asian currencies on concern next month’s referendum in Greece will push the debt-stricken nation to the verge of default, sapping demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index dropped after German Chancellor Angela Merkel and French President Nicolas Sarkozy withheld 8 billion euros ($11 billion) of assistance on the eve of a Group of 20 nations summit yesterday, warning Europe will stop all aid if Greece votes against a bailout and austerity package. Federal Reserve Chairman Ben S. Bernanke said the Fed may take further steps to boost U.S. growth after the policy-setting Federal Open Market Committee met yesterday.

“Players are reacting more to uncertainties surrounding the Greek referendum than Bernanke’s comments on supporting the economy,” said Ryoo Hyun Jung, chief currency dealer at Citibank Inc. in Seoul. “Most of Bernanke’s comments were within expectations, and not enough to stoke risk appetite.”

The peso weakened 0.8 percent to 43.12 per dollar at the close in Manila, the most in almost a year, according to Tullett Prebon Plc. The rupiah dropped 0.8 percent to 9,000, South Korea’s won slid 0.7 percent to 1,129.90 and Malaysia’s ringgit declined 0.5 percent to 3.1475.

The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, fell 0.2 percent as the MSCI Asia-Pacific Index of regional shares dropped 1.2 percent, taking its weekly loss to more than 6 percent.

Slowing Exports

Foreign funds sold $184 million more South Korean, Taiwanese and Indonesian stocks than they bought this week through yesterday, according to exchange data. European leaders for the first time raised the prospect of the euro area splintering, choosing to treat Greece’s December referendum as an in-or-out vote on its future in the currency union.

The won declined for a fourth day after South Korean President Lee Myung Bak said yesterday the euro-area debt crisis has had a “negative spillover” effect on the rest of the world. He called for a collective effort to tackle the problem in a speech in Cannes, France, before the start of the G-20 summit. South Korea’s overseas shipments increased at the slowest pace in two years last month, rising 9.3 percent from a year earlier, a government report showed on Nov. 1.

The ringgit slid for a fourth day, its longest losing streak in a month. Central bank Governor Zeti Akhtar Aziz told reporters in Kuala Lumpur on Nov. 1 that “risks and conditions are highly dynamic” and steps will be taken to ensure the country’s future prospects for growth aren’t undermined.

Yuan Advances

Official data due tomorrow will show Malaysia’s exports rose 12.1 percent from a year earlier, the most in 14 months, according to the median forecast of analysts surveyed by Bloomberg.

“The Greece issue is encouraging people to buy dollars,” said Calbert Loh, the head of treasury at Bangkok Bank Bhd. in Kuala Lumpur. “The European debt crisis will continue to dominate sentiment for the rest of year.”

China’s yuan advanced the most in a week as the central bank set a record daily reference rate and signaled that it will increase moves in the exchange rate. The People’s Bank of China set the reference rate 0.16 percent stronger at 6.3198 per dollar, the highest level since July 2005. The currency strengthened 0.09 percent to 6.3514.

The government remains open to increased flexibility of the yuan and will continue to “improve” its exchange-rate regime, Zhang Tao, director general of the international department of the PBOC said yesterday.

Elsewhere, India’s rupee dropped 0.4 percent to 49.39 per dollar. Taiwan’s dollar weakened 0.3 percent to NT$30.220 and Thailand’s baht fell 0.2 percent to 30.85.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net.

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

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