Asian Currencies Complete Weekly Drop on Stimulus Disappointment

Asian currencies had their first weekly drop in more than a month on concern regional exports will falter as China refrains from adding to measures that support growth in the region’s biggest economy.

The Bloomberg-JPMorgan Asia Dollar Index lost 0.3 percent in the past five days after data showed China’s imports rose the least in three months in July. India, South Korea, Indonesia and Taiwan all reported this month that their overseas shipments fell. Premier Wen Jiabao said there’s “growing room for monetary-policy operations,” during a visit to the eastern province of Zhejiang, Chinese state television reported this week. The yuan weakened 1 percent this year.

“There was disappointment that China didn’t do a stimulus,” said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd. in Singapore. “There’s also a sense China wouldn’t allow a fast pace of appreciation with its currency, which means Asian currencies have less room to rise.”

The Philippine peso weakened 1.3 percent this week to 42.420 per dollar in Manila, according to Tullett Prebon Plc. India’s rupee slid 0.8 percent to 55.7450, Malaysia’s ringgit fell 0.4 percent to 3.1323 and South Korea’s won lost 0.3 percent to 1,134.25. The yuan was little changed at 6.3585.

The People’s Bank of China lowered the yuan’s reference rate to 6.3495 per dollar yesterday, the weakest level since Nov. 29. Yuan positions at Chinese lenders accumulated from foreign-exchange purchases stood at 25.658 trillion yuan ($4 trillion) at the end of July, down from 25.661 trillion yuan in June, PBOC data showed on Aug. 14.

Chinese Exports

Chinese exports grew 1 percent in July from a year earlier, the smallest gain since a decline in January, figures released on Aug. 10 showed, spurring speculation the nation will act to revive growth.

The Philippine currency completed its biggest weekly slide since May as central bank Governor Amando Tetangco said on Aug. 14 a slowdown in China’s economy may hurt overseas sales. China is the Philippines’ largest export market after Japan and the U.S.

The peso touched 42.43 per dollar yesterday, the weakest level since June 29, after growth in remittances slowed. Funds sent home by Filipinos living abroad rose 4.2 percent in June from a year earlier, the least in 15 months, the central bank reported on Aug. 15. The peso has gained 3.3 percent this year, the second-best performance among Asia’s 11 most-active currencies.

The rupee touched a two-week low after Director General of Foreign Trade Anup Pujari said on Aug. 14 that merchandise shipments from India declined 14.8 percent to $22.4 billion last month, leaving a trade deficit of $15.5 billion. The currency completed the biggest weekly drop since June this week.

Indian Inflation

The rupee is also weakening on concern the fastest inflation among the largest emerging markets leaves little room for policy measures to stimulate growth, according to Mumbai- based brokerage Edelweiss Financial Advisors Ltd.

Reserve Bank of India Governor Duvvuri Subbarao said this week that high inflation has reduced room for policy measures to spur the nation’s economic growth. A government report on Aug. 14 showed wholesale prices rose 6.87 percent in July from a year earlier, after gaining 7.25 percent in June. Inflation was 5.2 percent in Brazil, 1.8 percent in China and 5.6 percent in Russia last month, according to official figures.

Thailand’s baht completed a weekly loss as official figures next week will probably show exports fell for a second month in July amid Europe’s debt crisis, according to a Bloomberg News survey of economists. The baht dropped 0.1 percent since Aug. 10 to 31.52 per dollar.

Thai GDP

Gross domestic product rose 3.1 percent last quarter from a year earlier, the most since the third quarter of 2011, a separate survey showed before data due on Aug. 20.

“Thailand is still benefiting from the rehabilitation process from last year’s floods, which is supporting domestic demand,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “But I don’t expect a one-way sharp appreciation in the baht as external demand is weak because of Europe’s debt crisis, and exports may continue to be sluggish.”

Elsewhere, Taiwan’s dollar slipped 0.1 percent this week to NT$30.025, while Indonesia’s rupiah closed at 9,494 yesterday, compared with 9,492 on Aug. 10. Vietnam’s dong was little changed at 20,845.

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

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

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