Asian currencies weakened, led by Malaysia’s ringgit, as concern Europe’s debt crisis will worsen reduced appetite for higher-yielding emerging-market assets.
All of the 10 most-traded currencies in Asia excluding the yen are headed for monthly declines as exchange data show international investors pulled $7.7 billion from South Korean, Taiwanese and Indonesian stocks during the period. Spanish Prime Minister Mariano Rajoy called for a show of force from European authorities yesterday as his government sought ways to avoid tapping markets to fund the bailout of the nation’s third-biggest lender.
“With growing concern about Europe’s situation, we are seeing risk-off sentiment again, and investors don’t want to put money into emerging markets,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “We will continue to see a weaker bias for Asian currencies.”
The ringgit dropped 0.6 percent to 3.1614 per dollar as of 10:53 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. Indonesia’s rupiah lost 0.5 percent to 9,526, while the Philippine peso and Thailand’s baht declined 0.3 percent to 43.655 and 31.69, respectively.
The Bloomberg-JPMorgan Asia Dollar Index traded near this year’s low after the extra yield investors seek to hold Spain’s 10-year bonds over German notes soared to the highest level since 1995.
Malaysian Investment Plans
The ringgit dropped the most in almost a week even after Malaysian Prime Minister Najib Razak announced yesterday a $6.5 billion private-investment plan, aimed at bolstering the economy as the European crisis threatens to slow growth.
“The concern is fixed on Spain,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “The ringgit is a currency that is going to continue to be at the whim of global risk appetite.”
The Philippine peso fell toward a four-month ahead of a government report on May 31 that economists surveyed by Bloomberg predict will show gross domestic product increased 4.3 percent in the first quarter from a year earlier, the most in 12 months.
“The peso is mostly being driven by global sentiment,” said Goh Puay Yeong, a Singapore-based foreign-exchange strategist at Credit Suisse Group AG. “Growth is still pretty decent there. The macroeconomic outlook is still stable.”
China’s yuan dropped for a second day on concern Europe’s debt crisis will worsen the slowdown in the world’s second-largest economy. The currency weakened 0.05 percent to 6.3479 per dollar. The decline in Chinese exports caused by weak European demand may affect whether Moody’s Investors Service raises the nation’s sovereign debt rating, Tom Byrne, a senior vice president at the company in Singapore, said yesterday.
“China is quite worried about Europe, which is its largest market,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “The central bank is increasingly focused on protecting export competitiveness. China is prepared to let its currency weaken against the dollar.”
Elsewhere, South Korea’s won advanced 0.5 percent to 1,179.15 per dollar from May 25 after onshore financial markets were closed yesterday for a public holiday. Taiwan’s dollar strengthened 0.1 percent to NT$29.615 and Vietnam’s dong was little changed at 20,860.