Oct. 8 (Bloomberg) -- India’s rupee and Malaysia’s ringgit led losses in Asian currencies as demand for riskier assets slowed before European leaders meet this week on measures to prevent their region’s debt turmoil from deepening.
Asian stocks snapped a two-day gain as the World Bank said economic growth in developing East Asia, which excludes India and Japan, will drop to an estimated 11-year low. Europe’s finance ministers meet in Luxembourg today to discuss closer banking cooperation and German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis began in 2009. On Oct. 10, Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande in Paris.
“Investors are still concerned about Europe’s problem,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. “There has also been concern about global growth. Sentiment is weak today.”
The rupee slumped 0.9 percent to 52.34 per dollar as of 2:08 p.m. in Mumbai, according to data compiled by Bloomberg. The ringgit declined 0.5 percent to 3.0694, Thailand’s baht fell 0.4 percent to 30.67 and the Singapore dollar dropped 0.3 percent to S$1.2307.
The MSCI Asia Pacific Index Excluding Japan Index of shares slumped 1.1 percent, the most since Sept. 20. Economic expansion in developing East Asia will probably decelerate to 7.2 percent from 8.3 percent in 2011, the Washington-based World Bank said in a report today. That would be the slowest pace since 2001, according to data from the lender.
The ringgit snapped a two-day advance as economists in a Bloomberg News survey forecast Malaysia’s factory production probably shrank 2 percent in August from a year earlier, the first contraction since July 2011. The statistics department will report the data on Oct. 11.
“The weak exports and expectations of worsening factory output are damping demand for the ringgit,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong. “Chances are the Malaysian currency will continue to weaken in the near term.”
The yuan dropped 0.04 percent to 6.2872 per dollar, according to China Foreign Exchange Trade System, versus 6.2849 on Sept. 28 before the financial markets closed for a weeklong holiday.
Bank of Korea
South Korea’s won dropped 0.1 percent to 1,112.05 per dollar, halting a rally that took it to an 11-month high last week. The central bank will cut its seven-day repurchase rate to 2.75 percent from 3 percent on Oct. 11, according to 13 of 16 economists in a Bloomberg survey. Three forecast no change.
“There will be limits to the currency’s strengthening as there is caution against government intervention at this level,” said Byeon Ji Young, a Seoul-based foreign-exchange analyst at Woori Futures Inc. “The Bank of Korea may cut borrowing costs this week to prevent further inflows that lead to won appreciation.”
Elsewhere, Taiwan’s dollar dropped 0.1 percent to NT$29.402, after gaining as much as 0.5 percent. The Philippine peso and Indonesia’s rupiah weakened 0.1 percent to 41.470 and 9,600, respectively. Vietnam’s dong was steady at 20,890.
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