Asian Currencies Drop as Stimulus Bets Cool; Peso Jumps on GDP

Most Asian currencies declined against the dollar as signs of improvement in the U.S. economy cooled expectations the Federal Reserve will ease monetary policy further.

South Korea’s won dropped toward a one-month low after a central bank report today showed manufacturers’ confidence is near the lowest level since 2009. Malaysia’s ringgit and Thailand’s baht fell for a fifth day before Fed Chairman Ben S. Bernanke speaks at a meeting of central bankers in Jackson Hole, Wyoming tomorrow. A central bank report yesterday said the U.S economy expanded gradually in July and early August.

“Ahead of the Jackson Hole speech, a lot of expectations of easing policy have been scaled back because the U.S. data is getting better,” said Thomas Harr, head of Asia local markets strategy at Standard Chartered Plc in Singapore. “That’s weighing on sentiment.”

The won fell 0.05 percent to close at 1,134.05 per dollar in Seoul, according to data compiled by Bloomberg. The ringgit and the baht weakened 0.1 percent to 3.1255 and 31.37, respectively. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, was little changed after losing 0.1 percent this week.

The Philippine peso reversed earlier losses after data showed gross domestic product increased 5.9 percent in the second quarter, beating the 5.5 percent median estimate of economists surveyed by Bloomberg. The economy expanded by 6.4 percent in the first three months of 2012. The peso rose 0.3 percent to 42.230 per dollar in Manila, after earlier weakening as much as 0.1 percent.

‘No Momentum’

A Bank of Korea index of manufacturers’ confidence for September was at 75 from 70 the previous month, the only readings below 80 since 2009. Levels of below 100 indicate that pessimists outnumber optimists.

“There’s a lot of caution in the market ahead of Bernanke’s speech,” said Yun Se Min, a Seoul-based currency trader for Busan Bank. “I see no momentum for the won to gain now, especially as we see importers ready to buy the dollar when the won strengthens.”

South Korea’s exports probably shrank 6.8 percent in August from a year earlier, contracting for a second month, while industrial output fell 0.9 percent in July from June, separate Bloomberg News surveys showed before data due in the next two days.

Fund Inflows

The baht was poised for its longest losing streak in three months as Japanese figures showed retail sales dropped 0.8 percent in July from a year earlier, compared with the median estimate in a Bloomberg survey for a decline of 0.1 percent. Asia’s second-largest economy accounted for 10.4 percent of goods shipped from Thailand in the first seven months of this year, official data show.

“Thailand exports quite a lot to Japan, and therefore, weak data in Japan is hurting market sentiment,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “However, funds are still flowing into Thailand and other Asian nations and that provides some support in the long run.”

Indonesia’s rupiah fell to the weakest level since May ahead of a Sept. 3 report that economists forecast will show the nation’s trade deficit widened to $1.5 billion in July, from $1.3 billion the previous month. The rupiah dropped 0.21 percent to 9,576 per dollar.

Elsewhere, China’s yuan gained 0.05 percent to 6.3485 per dollar. Taiwan’s dollar and India’s rupee were little changed at NT$29.99 and 55.625 against the greenback.

To contact the reporters on this story: Fion Li in Hong Kong at fli59@bloomberg.net; Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

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

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