Baht Leads Drop in Asian Currencies on Regional Slowdown Risk

Asian currencies fell, led by Thailand’s baht, as data showed the region isn’t immune to the global economic slowdown, deterring risk-taking.

The MSCI Asia-Pacific Index of shares dropped for a fifth day after a report yesterday showed Chinese imports missed estimates. Growth in the Chinese and Singaporean economies declined in the second quarter, according to median estimates in Bloomberg surveys before data due July 13. The International Monetary Fund will lower its 3.5 percent global-expansion forecast for this year in its next update July 16, Managing Director Christine Lagarde said this month.

“There is the question of how deep the current slowdown will be and that keeps the market bullish on the U.S. dollar for now,” said Choong Yin Pheng, manager for economic and bond research at Hong Leong Bank Bhd. in Kuala Lumpur. “The risk of interest-rate cuts in Asia is keeping investors cautious” after two reductions within a month in China, she said.

The baht dropped 0.3 percent to 31.73 per dollar as of 3:27 p.m. in Bangkok, according to data compiled by Bloomberg. Indonesia’s rupiah slipped 0.2 percent to 9,450, Malaysia’s ringgit weakened 0.2 percent to 3.1820 and India’s rupee declined 0.2 percent to 55.500.

China’s economy probably expanded 7.9 percent in the second quarter from a year earlier, easing from an 8.1 percent pace in the first three months this year, according to a Bloomberg survey. Inbound shipments into Asia’s largest economy increased 6.3 percent in June from a year earlier, compared with a forecast for an 11 percent gain in a Bloomberg survey.

Rate Meetings

Singapore may report that the city-state’s GDP expanded at an annual rate of 1 percent, following a 10 percent gain in the first quarter, according to a separate survey.

“Recent data are not helping to remove growth concerns,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “Investors are reluctant to take risks.”

The Bank of Korea holds its policy meeting tomorrow, at which 14 of 16 economists surveyed by Bloomberg predict the benchmark rate will be held at 3.25 percent. Two expect a 25 basis point cut. Bank Indonesia will hold borrowing costs at 5.75 percent tomorrow, according to all 20 analysts in another Bloomberg survey.

“The two benchmark rate cuts within a month by the People’s Bank of China have heightened concern over the economic downturn given the influence of Chinese growth to Asia,” Societe Generale SA said in a note to clients today. The time is ripe for Bank of Korea to turn dovish, it said.

Yuan Falls

China’s yuan fell 0.04 percent to 6.3685 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The People’s Bank of China set the currency’s reference rate 0.02 percent lower at 6.3209. Based on the forecasted 7.7 percent pace, growth in the world’s second-largest economy will be the slowest in three years.

“We’ve seen Chinese numbers yesterday showing a very sharp decline in imports, which raises the concern that there’s a slowdown in the global economy, particularly in Asia,” said Suresh Kumar Ramanathan, head of regional currency strategy at CIMB Investment Bank Bhd. in Kuala Lumpur.

Elsewhere, the Philippine peso was steady at 41.872 per dollar. South Korea’s won climbed 0.3 percent to 1,140.90, erasing an earlier drop of 0.2 percent. Taiwan’s dollar was little changed at NT$29.974 per dollar and the Vietnamese dong rose 0.1 percent to 20,905.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE