Asian Currencies Drop as Importers Seek Dollars; Won Pares Gain

Asian currencies declined, led by losses in India’s rupee and Thailand’s baht, on speculation importers stepped up dollar purchases to pay month-end bills.

The rupee snapped a two-day advance ahead of the Reserve Bank of India’s monetary policy review tomorrow, in which most economists predict borrowing costs will be kept unchanged to cool the fastest inflation among the biggest emerging economies. The baht fell the most in a week, while South Korea’s won pared gains that were built on reports Germany and Italy will take steps to contain Europe’s debt crisis.

“We are seeing dollar purchases, possibly for month-end payments,” said Naveen Raghuvanshi, a trader at Development Credit Bank Ltd. (DEVB) in Mumbai. “Traders will be wary of adding heavy positions ahead of the RBI review tomorrow.”

The rupee slid 0.3 percent to 55.496 per dollar as of 2:26 p.m. in Mumbai, according to data compiled by Bloomberg. The baht fell 0.3 percent to 31.60, retreating from a three-week hight and Indonesia’s rupiah weakened 0.1 percent to 9,478.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s currencies fell 0.13 percent, ending a three-day advance. The index’s 60-day historical volatility was little changed at 3.85 percent. Global funds have trimmed their net stock holdings by $2.6 billion in Korea, Taiwan and Thailand this month.

Korean Confidence

The baht touched 31.43 per dollar today, the strongest level since July 4, luring importers to buy the U.S. currency. Thai imports climbed 2.6 percent in June from a year earlier, while exports dropped 4.2 percent, official data showed July 25.

“Around 31.50 is a good level for importers,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “We can also expect month-end dollar demand from importers.”

The won gained 0.1 percent to 1,137.60 per dollar at the close in Seoul, after rising as much as 0.5 percent to a 12-week high on speculation policy makers in Europe and the U.S. will unveil measures to boost growth. South Korean manufacturers’ confidence index for August dropped to the lowest level since May 2009, a report showed today, underscoring the central bank’s July 12 decision to cut its benchmark interest rate to boost growth.

German Chancellor Angela Merkel and Italian Prime Minister Mario Monti yesterday backed European Central Bank President Mario Draghi’s approach to combat the sovereign debt crisis, saying they will do what’s needed to protect the 17-nation euro.

Europe, Fed

“There were doubts whether European policy makers’ lip service will turn into actual policies,” said Lee Gil Won, a bond trader at Shinhan Bank in Seoul.

The Federal Reserve starts its two-day policy review meeting tomorrow after a July 27 report showed growth in the world’s largest economy slowed to a 1.5 percent annual rate last quarter from 2 percent in the first three months of 2012. Employers probably added 100,000 workers in July following an 80,000 gain in June, based on the median forecast in a Bloomberg survey before a Labor Department report on Aug. 3. Unemployment rate held at 8.2 percent, based on the responses.

“Fresh stimulus moves would help stabilize emerging markets and economies and bring in more capital flows, boding well for risk assets,” Credit Agricole CIB said in a research note today.

China’s yuan rose 0.02 percent to 6.3794 per dollar in Shanghai. The People’s Bank of China set its reference rate at 6.3303, strengthening it for a third day.

New bank lending in China may be about 700 billion yuan ($110 billion) in July, Economic Information Daily reported today, citing an unidentified person. If realized, it’ll be a 42 percent jump from a year ago, according to official data.

Elsewhere, Taiwan dollar gained 0.1 percent to NT$30.08 against its U.S. counterpart, and the Philippine peso dropped 0.1 percent to 41.93. Malaysia’s ringgit gained 0.1 percent to 3.1527 and Vietnam’s dong was unchanged at 20,868.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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