Rupee Leads Drop in Asian Currencies on Global Slowdown Concern

Asian currencies fell, led by the Indian rupee, as concern a global economic slowdown is deepening damped demand for emerging-market assets.

China’s economy probably expanded 7.4 percent last quarter, the least in more than three years, a Bloomberg News survey showed before data due Oct. 18. Bank of Israel Governor Stanley Fischer said in Tokyo on Oct. 13 that the world is “awfully close” to a recession. European leaders will meet in Brussels for an Oct. 18-19 summit as Greece seeks fresh aid and Spain holds out on tapping a bailout.

“There’s caution ahead of the Chinese data,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The European Union summit this week may add a little bit of volatility to currency markets.”

The rupee weakened 0.4 percent to 53.0200 per dollar as of 2:45 p.m. in Mumbai, according to data compiled by Bloomberg. Thailand’s baht dropped 0.2 percent to 30.70, Indonesia’s rupiah weakened 0.1 percent to 9,599 and Malaysia’s ringgit depreciated 0.1 percent to 3.0600. China’s yuan fell 0.1 percent to 6.2707, after earlier rising to the strongest level in 19 years as the central bank bolstered the currency’s reference rate by the most in seven months.

The Asia Dollar Index, which tracks the region’s 10 most-active currencies outside Japan, was little changed. The MSCI Asia Pacific Index of shares was 0.1 percent higher after earlier dropping as much as 0.3 percent.

Weakening Outlook

Last week, the International Monetary Fund cut its forecasts for global expansion this year to 3.3 percent, which would be the smallest gain since the 2009 recession, and said there are “alarmingly high” risks of a steeper slowdown. The Washington-based lender lowered its estimate for India’s growth to 4.9 percent from 6.1 percent.

The rupee fell for a second day as a government report today showed inflation accelerated to 7.81 percent last month from 7.55 percent in August. The median estimate in a Bloomberg survey had predicted a 7.70 percent increase.

“Weak sentiment from global markets is weighing on the rupee,” said Pramit Brahmbhatt, Mumbai-based chief executive officer at Alpari Financial Services India Ltd. “China’s third-quarter growth numbers are in focus.”‬

The baht depreciated the most since Oct. 10 as global funds reduced holdings of the nation’s equities on concern European nations will struggle to contain their region’s debt crisis.

‘Not Encouraging’

International investors sold $378 million more Thai shares than they bought last week, exchange data show. The Spanish government wants to obtain guarantees that the European Central Bank will intervene in the debt market in order to request a bailout, El Pais reported yesterday, citing unidentified people in the government.

“The external environment is not really encouraging investors to take risks,” said Kozo Hasegawa, a Bangkok-based foreign-exchange trader at Sumitomo Mitsui Banking Corp. “The local currency doesn’t look bullish either.”

The yuan touched the strongest level since China unified the official and market exchange rates in 1993 as official data showed exports grew more than economists estimated.

Overseas shipments rose 9.9 percent from a year earlier in September, the biggest gain in three months, official figures showed Oct. 13. That beat the 5.5 percent median forecast in a Bloomberg survey.

Yuan Fixing

The People’s Bank of China raised the reference rate by 0.24 percent today to 6.3112 per dollar after the trade surplus in the first nine months widened about 38 percent from a year earlier to $148.3 billion. The yuan is close to equilibrium level, PBOC Deputy Governor Yi Gang said at an International Monetary Fund event in Tokyo yesterday.

“The yuan had a boost from the better-than-expected exports and the PBOC fixing,” said Daniel Chan, executive vice president at Glory Sky Global Markets Ltd. in Hong Kong. “Yet it’s difficult for the currency to stay at such a strong level given overseas orders haven’t shown any significant recovery. Yi’s comments support such a view.”

Elsewhere in Asia, Singapore’s dollar fell 0.1 percent to S$1.2216 against the U.S. currency and the Philippine peso dropped 0.1 percent to 41.467. South Korea’s won rose 0.1 percent to 1,110.45 and and Vietnam’s dong was little changed at 20,853. Taiwan’s dollar rose 0.1 percent to NT$29.345.

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