Asian Currencies Decline on Slowdown, Deepening Europe Crisis
Asian currencies fell to a two-week low, led by Indonesia’s rupiah, on concern Europe’s worsening debt crisis will slow global growth.
South Korea’s won and the Philippine peso both dropped for a third day as regional stocks declined. France and Italy are urging Germany to take decisive action ahead of a two-day summit in Belgium from June 28 after Spain’s 10-year bond yields rose above 7 percent last week. China’s yuan slid the most since April 5, while India is due to announce plans today to support the rupee.
“Hopes are high but optimistic expectations on Europe are at risk of being disappointed,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “The market is also anxious for a greater policy response as the soft economic patch is at risk of worsening.”
Indonesia’s rupiah weakened 0.5 percent to 9,485 per dollar as of 9:31 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. Thailand’s baht declined 0.4 percent to 31.89, the won fell 0.3 percent to 1,160.90 per dollar, the peso dropped 0.4 percent to 42.635 and the yuan lost 0.20 percent to 6.3771.
The Bloomberg-JPMorgan Asia Dollar Index fell 0.16 percent and touched its lowest level since June 8. The gauge’s 60-day historical volatility rose to 2.92 percent from 2.91 percent. The MSCI Asia-Pacific Index of stocks fell 0.4 percent, a third day of losses.
Thailand’s baht fell to a three-week low after overseas investors cut net holdings of the nation’s stocks by $140 million last week. A government report will show today exports rose 0.5 percent in May from a year earlier after declining 3.67 percent in April, according to the median forecast in a Bloomberg News survey.
“Foreigners have been net sellers in Thailand for quite some time and that put downward pressure on the baht,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “Sentiment remains weak until the EU summit.”
India plans to announce measures today to support the rupee after the currency slumped to record-low of 57.3275 per dollar on June 22, Finance Minister Pranab Mukherjee said yesterday. The rupee is Asia’s worst-performing currency this year, losing 6.4 percent.
The yuan reached its weakest level in seven months after the People’s Bank of China set its reference rate 0.30 percent lower at 6.3230 per dollar.
“We had seen big moves in the U.S. dollar crosses versus the euro, yen and Aussie dollar,” said Robert Minikin, a senior strategist at Standard Chartered Bank in Hong Kong. The weaker yuan also reflects the unwinding of gains following strong fixings before the Group of 20 meeting last week, he said.
Elsewhere, Malaysia’s ringgit was little changed at 3.1930 per dollar. Taiwan’s dollar was steady at NT$29.962, while the Vietnamese dong climbed 1.1 percent to 20,910.
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