Rupiah Leads Weekly Losses in Asian Currencies on Slowing Growth

Asian currencies fell this week as a deepening global economic slowdown curbed risk-taking and hurt demand for the region’s assets.

Indonesia’s rupiah was set for the worst week in a month after the government failed to raise its target amount for a fifth straight auction of Islamic bonds. Data released yesterday showed South Korea’s second-quarter economic growth was the least in almost three years, and the Bank of Thailand cut its 2012 growth forecast to 5.7 percent from 6 percent on July 25. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s currencies, pared losses after European Central Bank President Mario Draghi pledged to preserve the euro.

“Risk-taking appetite has been low this week,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “Economic slowdown is happening in many countries, and although there are some hopes for Europe today, you never know if Draghi’s comments will turn into concrete actions.”

The rupiah slid 0.5 percent this week to 9,495 per dollar as of 3:25 p.m. in Jakarta, the most since June 22, prices from local banks compiled by Bloomberg show. Taiwan’s dollar weakened 0.4 percent to NT$30.10 and Malaysia’s ringgit slipped 0.3 percent to 3.1610. India’s rupee retreated 0.3 percent to 55.51.

Global funds sold $1.6 billion more Indonesian, South Korean, Taiwanese and Thai stocks than they bought this week through yesterday, according to exchange data.

China Concern

Chinese industrial companies’ profits fell 1.7 percent from a year earlier to 467.2 billion yuan ($73 billion) in June, a third month of declines, government data showed today.

Song Guoqing, a central bank adviser, said on July 21 that growth in the world’s second-biggest economy may slow to 7.4 percent this quarter because of “problems on the export side.” That would be the slowest pace since the first three months of 2009, according to official figures.

The yuan declined 0.11 percent this week to 6.3807, and touched 6.3967 on July 25, the weakest level since Sept. 29.

“The current slowdown has undoubtedly inflicted a lot of pain on the corporate sector,” said Yao Wei, a China economist at Societe Generale SA in Hong Kong. Taxes and wages are squeezing companies “from both ends” and the limited room private businesses have for expanding is helping push China “into a state of profitless growth,” Yao said.

Philippine Rate Cut

The Philippine peso rallied for a second day after the central bank unexpectedly cut borrowing costs yesterday, boosting optimism policy makers are stepping up efforts to help the country weather the global slowdown. Bangko Sentral ng Pilipinas lowered its overnight rate to a record low of 3.75 percent from 4 percent.

The peso appreciated 0.1 percent to 41.908 per dollar from a week ago, aided by a 0.5 percent rally today. The currency has strengthened 4.5 percent this year, the biggest gainer among Asia’s 11 most-traded currencies, data compiled by Bloomberg show.

Elsewhere, Thailand’s baht gained 0.3 percent to 31.55 and South Korea’s won also climbed 0.3 percent this week to 1,138.25. Vietnam’s dong declined 0.1 percent to 20,868.

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