Asia Currencies Have Worst Week Since January on BOJ Push, Curbs

Asian currencies fell the most this week since January as policy makers from the Philippines to Japan proposed measures that tend to weaken their exchange rates.

The Bank of Japan said April 4 it would double monthly bond buying to 7 trillion yen ($72 billion) to fight deflation and South Korea’s presidential office signaled it favors lower borrowing costs. The yen slumped to an June 2009 low yesterday, making its exports cheaper than those from Korea and Taiwan. The Philippine central bank is considering steps to spur capital outflows, Governor Amando Tetangco said this week, while data signaled the U.S. economy is starting to cool.

The Bloomberg-JPMorgan Asia Dollar Index declined 0.3 percent since March 29, the most since the week ending Jan. 25. South Korea’s won slumped 1.8 percent to a seven-month low of 1,131.69 per dollar, according to data compiled by Bloomberg. The Philippine peso dropped 0.9 percent to 41.18 and India’s rupee depreciated 1 percent to 54.8125, the most in a month.

“Japan’s surprisingly big size of stimulus sparked a strong bout of dollar buying,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “Concerns over a global economic recovery also weighed on emerging-market currencies this week.”

The Asia Dollar Index, which tracks the region’s most-active currencies excluding the yen, has retreated 1.5 percent from a 16-month high of 118.89 on Jan. 18.

Competing Exports

Taiwan’s central bank Governor Perng Fai-nan said March 28 that the island’s and Japanese exports are 38 percent similar, compared with 83 percent for South Korean and Japanese shipments.

Manufacturing in the U.S. trailed economists’ forecasts in March and unemployment in the euro-area held at a record 12 percent in February, official reports showed this week.

North Korea said on April 3 that it will restart all facilities at the Yongbyon nuclear site shut by a 2007 disarmament accord. Overseas funds pulled a net $625 million from the Korean stock market this week through April 4.

“Geopolitical risk from the North Korean threat is likely to weigh on the won for an extended period of time,” said Suh Dae Il, an analyst at KDB Daewoo Securities Co. in Seoul.

India’s rupee slid after the central bank said March 28 that the current-account deficit widened to a record $32.6 billion in the final quarter of 2012, from $22.6 billion in the preceding three months.

Ringgit Rallies

Malaysia’s ringgit rallied 1.2 percent to 3.0570 per dollar from March 29 after Prime Minister Najib Razak dissolved parliament on April 3 and called for national elections. The currency reached a seven-month low of 3.1395 on March 18.

“Elections are probably going to be held before the end of April and we expect to see funds coming back,” said Wee-Khoon Chong, a rates strategist in Hong Kong at Societe Generale SA. “The risk-reward is still favoring the incumbent to continue another term.”

Elsewhere in Asia, China’s yuan was at 6.2030 per dollar after touching a 19-year high of 6.1986 on April 2 before markets closed for holidays April 4 and yesterday. Indonesia’s rupiah fell 0.2 percent to 9753 and Vietnam’s dong was at 20,925.

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