Asian Currencies Decline as Europe Crisis Damps Export Outlook

Asian currencies fell, led by the Philippine peso and Thailand’s baht, on concern Europe’s financial crisis is hurting demand for the region’s goods.

Taiwan’s central bank will keep its benchmark interest rate at 1.875 percent today, all 15 economists surveyed by Bloomberg News predicted, after data yesterday showed export orders contracted for a third month. Bank Negara Malaysia Governor Zeti Akhtar Aziz said yesterday that there is no clarity on the European debt crisis. Borrowing costs in Spain rose to more than 7 percent this week, compared with 5.11 percent at the start of the year, after the country joined Greece, Ireland and Portugal in seeking a bailout.

“Investors are still very worried about the situation in Spain and that negatively impacts Asian currencies,” said Nalin Chutchotitham, a Bangkok-based analyst at Kasikornbank Pcl. “We are also waiting to see what conclusions the European Union will come up with later this month.”

The peso weakened 0.7 percent to 42.423 per dollar in Manila, according to prices from Tullett Prebon Plc. The baht depreciated 0.7 percent to 31.74 and Malaysia’s ringgit slid 0.6 percent to 3.1785.

The Bank of Thailand cut its 2012 export-growth forecast to about 8 percent from 9 percent due to the crisis in Europe, Songtham Pinto, director of the central bank’s office of macroeconomics, said June 19. The baht touched 31.75 per dollar, its weakest level since June 11.

China Manufacturing

Government data due next week may show overseas shipments from Thailand gained 0.65 percent in May after a decline of 3.67 percent in April, according to the median estimate of economists in a Bloomberg News survey.

China’s manufacturing may shrink for an eighth month in June, a preliminary reading for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics showed today. The PMI dropped to 48.1, compared with a final 48.4 for May. A level above 50 indicates expansion.

The Federal Reserve lowered forecasts for U.S. economic growth and raised predictions for unemployment yesterday as it expanded the Operation Twist program. It plans to sell $267 billion of short-term debt and purchase the same amount of longer-maturity bonds in a bid to reduce borrowing costs.

“The market is disappointed as they expected a new round of quantitative easing, which would have been positive for riskier assets,” said Klara Pramesti, a research analyst in the treasury division at PT Bank Negara Indonesia in Jakarta. The rupiah fell as much as 0.7 percent before trading 0.1 percent higher on the day at 9,434 per dollar.

Malaysia Growth

Malaysia’s services sector, which accounts for about 48 percent of the country’s gross domestic product, may expand 5.1 percent this year after increasing 6.8 percent in 2011 because of the weaker global outlook, the trade ministry said in an annual report released yesterday.

“The risk for Malaysia’s economy is both on the external front, which is from Europe, and domestically it’s the speed of government spending,” said Enrico Tanuwidjaja, a Singapore-based senior currency analyst at Malayan Banking Bhd. “We have a strong-dollar call at least until the end of the year.”

Elsewhere, South Korea’s won was little changed at 1,151.59 per dollar, while Taiwan’s currency fell 0.1 percent to NT$29.902. China’s yuan weakened 0.07 percent to 6.3642.

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