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Asian Currencies Weaken, Led by Rupiah, on U.S. Deficit-Cutting Concern

Asian currencies fell, led by India’s rupee, as speculation U.S. lawmakers will struggle to reach an agreement on deficit-cutting measures prompted investors to sell higher-yielding emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index dropped for a sixth day after a U.S. congressional super committee indicated it would be difficult to bridge disputes over taxes and spending by a Nov. 23 deadline. The MSCI Asia-Pacific index of stocks declined for a fifth day as Singapore forecast slower economic growth next year. Deutsche Bank AG Chief Executive Officer Josef Ackermann said yesterday Europe needs a “firewall” to contain its debt crisis.

“The likely collapse of an agreement among the U.S. congressional budget-deficit panel would hurt risk sentiment,” said Rees Kam, a Hong Kong-based senior strategist at SJS Markets Ltd. “That’s the main reason driving Asian currencies down as well as equities. Market participants are still worried about the situation in the euro zone.”

The rupee weakened 1 percent to 51.87 per dollar as of 2:27 p.m. in Mumbai, according to data compiled by Bloomberg. Malaysia’s ringgit fell 0.6 percent to 3.1795, Thailand’s baht dropped 0.4 percent to 31.11 and Indonesia’s rupiah slipped 0.2 percent to 9,038.

Equity Outflows

India’s currency dropped to a 32-month low as the BSE India Sensitive Index slid for an eighth day. Foreign investors sold $154 million more Indian shares than they bought last week through Nov. 17, according to data from the market regulator.

The rupiah fell for a fifth day, its longest losing streak in more than two months. Bank Indonesia Deputy Governor Hartadi Sarwono said in October policy makers will sell the dollar when needed to ease currency volatility.

“The debt issue has shifted to the U.S. now, prompting people to move to safe havens like the dollar,” said Bambang Eko Joewono, the Jakarta-based head of the global-markets division at PT Bank UOB Indonesia. “Bank Indonesia will come in and defend the currency at 9,125.”

Southeast Asia’s biggest economy will grow 6.5 percent next year, compared with a previous estimate of 6.7 percent, Bank Indonesia said last week.

The ringgit retreated for a third day as Singapore, Malaysia’s second-biggest export market, forecast its economy will grow 1 percent to 3 percent next year after expanding 5 percent in 2011.

“The weaker Singapore economic forecast for 2012 is weighing on sentiment,” said Zulkiflee Nidzam, head of foreign- exchange trading at Asian Finance Bank Bhd. in Kuala Lumpur. “The Malaysian currency could weaken to 3.20 to the dollar.”

Elsewhere, South Korea’s won dropped 0.1 percent to 1,140.60 per dollar. Taiwan’s dollar was little changed at NT$30.260, while the Philippine peso strengthened 0.2 percent to 43.305. China’s yuan fell 0.07 percent to 6.3600.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

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

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