Asian Currencies Decline After IMF Cuts Global Growth Estimate

Asian currencies weakened, led by Indonesia’s rupiah, after the International Monetary Fund cut its forecast for global economic growth, damping the outlook for the region’s exports.

The IMF lowered the expansion estimate for this year to 4 percent from 4.3 percent and that for 2012 to 4 percent from 4.5 percent, predicting a “severe” fallout if Europe fails to contain its debt crisis. Malaysia, South Korea, Indonesia and the Philippines kept interest rates unchanged this month to add support to their economies. Thailand’s Commerce Minister Kittiratt Na-Ranong urged today the nation’s central bank to consider holding borrowing costs at its meeting.

The Bloomberg-JPMorgan Asia Dollar Index fell 0.4 percent to 116.03 as of 4:44 p.m. in Hong Kong, approaching a six-month low. The rupiah slumped 2.4 percent to 9,113 per dollar and Malaysia’s ringgit declined 0.7 percent to 3.1330, according to data compiled by Bloomberg. Taiwan’s dollar dropped 0.2 percent to NT$29.95.

“Growth risk is in focus and Asian currencies like the ringgit have suffered due to Europe’s crisis,” said Choong Yin Pheng, manager of economic and fixed-income research at Hong Leong Bank Bhd. in Kuala Lumpur. “Slowing inflation will reinforce the view that interest rates could be on hold or fall going into the first half of next year.”

Fund Outflows

The rupiah slid to an eight-month low as investors pared holdings of assets perceived risky, including those in emerging markets, on concern Europe’s debt crisis will worsen.

The currency lost 6.3 percent in September as foreigners’ ownership of local government bonds fell 5.3 percent to 234.18 trillion rupiah ($26.2 billion) as of Sept. 19, according to debt management office data. Foreign funds sold $440 million more Indonesian shares than they bought this month through yesterday, exchange data show.

“Investors have been selling equities and bonds,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth in Jakarta. “Europe’s debt crisis continues to drive market sentiment and it has hit all major currencies in the region.”

The ringgit traded near this year’s low as a government report showed inflation slowed to 3.3 percent in August from 3.4 percent the previous month, matching the median estimate of economists in a Bloomberg survey. Bank Negara Malaysia kept its overnight rate at 3 percent at reviews on July 7 and Sept. 8, contributing to the currency’s 3.6 percent drop this quarter.

‘Poor Trade Outlook’

Taiwan’s dollar fell toward an eight-month low as overseas funds sold $181 million more of of the island’s shares than they bought yesterday, according to exchange data. Orders received by local exporters grew in August at the slowest pace in 22 months, government data showed yesterday.

“Export orders released yesterday printed a poor trade outlook for this Christmas,” said Raymond Yeung, an economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “The central bank is very likely to adopt a dovish stance temporarily, pausing interest-rate normalization and promoting export competitiveness.”

Elsewhere, Thailand’s baht, the Philippine peso, South Korea’s won and India’s rupee retreated 0.1 percent each against the dollar to 30.44, 43.533, 1,149.83 and 48.12, respectively. China’s yuan gained 0.03 percent to 6.3823.

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