Asian Currencies Decline on Signs Europe Crisis Hurting Exports

Indonesia’s rupiah led a decline among Asian currencies on further evidence Europe’s debt crisis is hurting demand for regional exports, threatening a deeper slowdown from Japan to China and Thailand.

Japan downgraded its assessment on the economy for the first time in 10 months today as overseas shipments slowed, while China’s Vice Commerce Minister Wang Chao said at a forum in Beijing that the global economic situation is “severe” and “complicated.” Thai data tomorrow may show exports contracted for a second month in July, according to the median estimate of economists in a Bloomberg News survey.

“Europe’s debt crisis is lingering and hurting Asian assets through actual damage on exports and risk sentiment,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Emerging currencies and risk assets are likely to see some downward pressure.”

The rupiah fell 0.4 percent to 9,552 per dollar as of 3 p.m. in Jakarta, according to local bank prices compiled by Bloomberg. Malaysia’s ringgit dropped 0.3 percent to 3.1185 and the Thai baht fell 0.2 percent to 31.33, the most in two weeks. South Korea’s won closed 0.1 percent weaker at 1,136.75 and earlier touched 1,138.08, the lowest level this month.

The Bloomberg-JPMorgan Asia Dollar Index (MXAP), which tracks the region’s currencies, declined for a third day. The index’s 60- day historical volatility dropped to 3.47 percent from 3.61 percent yesterday. The MSCI Asia Pacific Index of stocks lost 0.4 percent.

Ifo, Bernanke

Data yesterday showed business confidence in Germany, Europe’s biggest economy, fell for a fourth straight month in August, the Ifo institute reported.

Federal Reserve Chairman Ben S. Bernanke is due to deliver a speech at an Aug. 31 forum for central bankers in Jackson Hole, Wyoming, after he said last week there was room to ease financial conditions.

“Nobody really wants to take on excessive risk positions ahead of Jackson Hole,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “The German Ifo’s fall shows that the decay is spreading to the core.”

Thailand’s baht extended its retreat from a three-month high as economists predict data will show exports decreased 3.8 percent in July from a year earlier, after a 4.2 percent slide in June, according to the median estimate in a Bloomberg survey.

China’s Yuan

China’s yuan climbed 0.03 percent to 6.3551 per dollar in Shanghai, snapping a three-day drop. The People’s Bank of China weakened its reference rate for a second straight day, by 0.03 percent to 6.3411. Chinese industrial companies’ profits fell in July by the most this year, the government reported yesterday.

The Philippine peso dropped 0.3 percent to 42.307 per dollar after a report today showed the nation’s trade deficit widened to $787 million in June from $454 million in May. A report on Aug. 30 may show economic growth slowed to 5.5 percent last quarter, compared with a 6.4 percent pace in the preceding three months, a Bloomberg survey shows.

Elsewhere, Taiwan’s currency fell 0.1 percent to NT$30.007, reversing a 0.1 percent gain. India’s rupee slipped 0.1 percent to 55.765 per dollar and Vietnam’s dong fell to 20,875 from 20,865 yesterday.

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

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

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