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Asian Currencies Depreciate, Led by Rupiah, After European Rating Warnings

Asian currencies declined, led by India’s rupee and Thailand’s baht, after ratings companies said last week’s European summit did little to ease the region’s debt crisis, weakening the outlook for exports.

The MSCI Asia-Pacific Index (MXAP) of shares fell 1 percent after Moody’s Investors Service said yesterday the summit doesn’t diminish the risk of credit-rating downgrades for European nations. Fitch Ratings said a comprehensive solution hasn’t yet been offered and predicted a “significant economic downturn” in the region. Global investors sold $17.6 billion more South Korean, Taiwanese and Thai stocks than they bought this year, exchange data show.

“The European summit failed to reassure investors the debt crisis will ease soon, and this is fueling concern about an economic slowdown,” said Kim Doo Hyun, a senior currency dealer at Korea Exchange Bank in Seoul. “Asian currencies, including the won, will continue this weakening trend at least until year- end.”

The rupee weakened to a record low, sliding 1 percent to 53.3750 per dollar as of 2:13 p.m. in Mumbai, according to data compiled by Bloomberg. It earlier touched 53.5200. Thailand’s baht dropped 0.8 percent from Dec. 9 to 31.20 as markets resumed following yesterday’s public holiday. Indonesia’s rupiah declined 0.6 percent to 9,105, while South Korea’s won and the Philippine peso fell 0.6 percent to 1,153.99 and 43.885, respectively.

‘Much Weaker Outlook’

India’s rupee fell for a sixth day as factory output shrank 5.1 percent in October, the first contraction since June 2009, the government reported yesterday.

“The fundamentals for the rupee are very weak,” J. Moses Harding, a Mumbai-based executive vice president at IndusInd Bank Ltd., wrote in an e-mail today. “Domestic cues are bearish and the external sector is yet to see the worst.”

Philippine data today showed exports fell 14.6 percent in October from a year earlier, compared with a 27 percent decline the previous month. China’s overseas sales rose 13.8 percent in November, the smallest gain since 2009, as demand from Europe declined, data showed last week.

The yuan dropped the most in more than a week as the People’s Bank of China weakened its daily fixing by 0.1 percent, the most since Nov. 24, to 6.3359 per dollar. The currency declined 0.07 percent to 6.3652 in the spot market, according to the China Foreign Exchange Trade System.

“As the European debt crisis is likely to linger for longer, China’s exporters are facing a much weaker outlook next year,” said Tommy Ong, Hong Kong-based senior vice president of treasury and markets at DBS Group Holdings Ltd.

Elsewhere, Malaysia’s ringgit weakened 0.4 percent to 3.1790, the Singapore dollar dropped 0.2 percent to S$1.3015 and Taiwan’s dollar retreated 0.1 percent to NT$30.260. Vietnam’s dong rose 0.5 percent to 21,011.

To contact the reporter on this story: 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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