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Asia Currencies Fall on Concern China Slowdown Will Hurt Exports

Asian currencies weakened as a private report signaled China’s manufacturing will shrink for a fifth straight month, clouding the region’s export outlook.

The Bloomberg-JPMorgan Asia Dollar Index erased earlier gains after HSBC Holdings Plc and Markit Economics reported a preliminary reading of 48.1, a four-month low, for factory output in the world’s second-largest economy in March. A number below 50 indicates contraction. Thailand left interest rates unchanged yesterday as costlier oil boosts the risk of faster inflation. Taiwan may also hold borrowing costs today, according to a Bloomberg survey.

“The market is worried about the slowdown in the Chinese economy,” said Irene Cheung, a currency strategist in Singapore at Australia & New Zealand Banking Group. “We still have oil prices at levels which could mean imported inflation can be a threat to the economy.”

India’s rupee slumped 0.6 percent to 50.9613 per dollar as of 1:40 p.m. in Mumbai, according to data compiled by Bloomberg. Indonesia’s rupiah dropped 0.4 percent to 9,182, Malaysia’s ringgit fell 0.2 percent to 3.0820 and Thailand’s baht slid 0.1 percent to 30.79.

The Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, was unchanged from yesterday. The gauge’s 60-day historical volatility fell to 3.48 percent from 3.49 percent yesterday.

Inflation Concern

The rupiah snapped a two-day gain after global funds cut holdings of the nation’s bonds on concern a government plan to raise fuel prices will stoke inflation.

Overseas investors sold 2.6 trillion rupiah ($283 million) more local debt than they bought this month as the government proposed revising its inflation target for 2012 to 7 percent from 5.3 percent, according to a document presented to parliament on March 7. Crude oil prices have climbed 7.8 percent this year to $106.54 per a barrel in New York.

“The rupiah will still tend to weaken as we are seeing a lot of orders from banks to buy the dollar,” said Dave Hartono, a Jakarta-based currency trader at PT Bank ICBC Indonesia. “They are waiting to see how inflation will play out.”

The won touched a one-week low after a U.S. report showed sales of previously-owned houses unexpectedly fell in the world’s biggest economy, sapping demand for riskier assets. The currency closed little changed at 1,129.58 per dollar.

Purchases of existing homes dropped 0.9 percent to a 4.59 million annual rate, compared with the median forecast for an increase to 4.61 million in a Bloomberg News survey, figures showed yesterday. Federal Reserve Chairman Ben S. Bernanke told Congress yesterday that higher energy prices may weaken the U.S. economy and that Europe’s financial and economic situation “remains difficult.”

Malaysia Growth Forecast

Malaysia’s ringgit traded near a two-month low as the central bank forecast slower economic growth. Gross domestic product may expand 4 percent to 5 percent in 2012, the central bank said yesterday. That is less than the finance ministry’s 5 percent to 6 percent forecast in October, and a 5.1 percent pace in 2011.

“The lower GDP target raises the possibility of a rate cut,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “This will make the ringgit less attractive to investors.”

Elsewhere, the Philippine peso and Taiwan’s dollar were little changed at 43.045 and NT$29.574, respectively. China’s yuan climbed 0.25 percent to 6.3070.

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