Rupee Leads Drop in Asian Currencies as Reports Highlight Slump

India’s rupee and South Korea’s won led losses in Asian currencies after reports this week added to concern the global economic slowdown is deepening, damping the region’s export outlook.

The International Monetary Fund yesterday cut its global growth forecast to the least since the 2009, and warned today that Europe’s debt crisis could worsen. Philippine overseas sales unexpectedly fell in August, official data showed today. Industrial production in Malaysia dropped in August for the first time in a year and the Bank of Korea will cut its benchmark interest rate tomorrow, according to Bloomberg surveys.

“Sentiment for the regional currencies will remain weak for now due to global growth concerns highlighted by the IMF,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Asian nations like Thailand and Malaysia that depend on exports will see a bigger negative impact from the slowdown in external demand.”

The rupee slid 0.4 percent to 52.94 per dollar as of 2:05 p.m. in Mumbai, according to data compiled by Bloomberg. The won weakened 0.4 percent to 1,114.70 and Thailand’s baht and the Philippine peso each declined 0.2 percent to 30.71 and 41.557, respectively. Malaysia’s ringgit lost 0.1 percent to 3.0757.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-active currencies, fell for a second day. Its 60- day historical volatility was steady at 2.64 percent. The MSCI Asia Pacific Index (MXAPJ) of shares slumped 0.9 percent, extending its slide this week to 1.6 percent.

Bearish IMF Report

European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the region’s fiscal crisis, the IMF said in a report released today. That’s 18 percent more than the Washington-based lender estimated in April. The IMF lowered its international growth forecast for 2012 to 3.3 percent, compared with a July estimate of 3.5 percent.

The peso dropped the most in two weeks after the statistics office said exports fell 9 percent in August from a year earlier, compared with a median forecast for a 5.5 percent gain in a Bloomberg survey. Shipments rose 6 percent in July.

The ringgit touched the lowest level in almost two weeks ahead of a government report that may show factory output fell 2 percent in August from a year earlier, the first drop since July 2011. Exports decreased 4.5 percent in August, following a 2.6 percent decline in July, official data showed last week.

“The weak factory output data tomorrow could be another excuse to sell the ringgit,” said Vishnu Varathan, a Singapore- based economist at Mizuho Corporate Bank Ltd. “People are still chewing over the IMF’s bearish report.”

Korean Rate Decision

Korea’s currency dropped the most since Sept. 20 before the Bank of Korea’s policy meeting, at which 13 of 16 economists surveyed by Bloomberg forecast it will cut the seven-day repurchase rate to 2.75 percent. Three predict no change.

The yuan appreciated 0.07 percent to 6.2833 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency approached a 19-year high, reversing an earlier decline, on speculation fund inflows into emerging markets will increase after U.S. Federal Reserve pledged last month to keep borrowing costs near zero through mid-2015.

The People’s Bank of China weakened its reference rate for the yuan to 6.3449, the lowest since Sept. 27. The Chinese currency rallied 3.6 percent in 2010, 4.7 percent in 2011 and is 0.2 stronger this year.

Elsewhere, Indonesia’s rupiah rose 0.1 percent to 9,593 and the Vietnamese dong gained 0.1 percent to 20,855. Financial markets in Taiwan are closed for a holiday.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net

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

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