Rupiah Leads Weekly Drop in Asian Currencies on U.S. Debt Risk

Asian currencies fell this week, led by Indonesia’s rupiah and Malaysia’s ringgit, as concern U.S. lawmakers will be unable to resolve a budget impasse deterred risk-taking.

The rupiah touched the weakest level since April 2009 on Sept. 25 and the ringgit had its biggest weekly drop in three months. The U.S. Senate voted yesterday to finance the government through Nov. 15 after removing language to choke off funding for a health-care law, putting pressure on the House to avoid a federal shutdown set to start Oct. 1. Overseas investors pulled $381 million from Indonesian and Thai stocks this week, exchange data show.

“The uncertainty in the U.S. is affecting sentiment to a certain extent,” said Joey Cuyegkeng, an economist at ING Groep NV in Manila.

The rupiah slid 1.7 percent this week to 11,539 per dollar as of late yesterday in Jakarta, prices from local banks showed. The ringgit dropped 1.9 percent to 3.2276 per dollar, the Philippine peso weakened 0.7 percent to 43.33 and Thailand’s baht fell 0.7 percent to 31.33. India’s rupee declined 0.4 percent to 62.4975.

Indonesia’s government will announce August trade data next week, after imports exceeded exports by an unprecedented $2.3 billion in July. Bank Indonesia has increased its reference rate by 1.5 percentage points to 7.25 percent since mid-June, and the monetary authority doesn’t want to see the currency “too strong,” spokesman Peter Jacobs said this month.

Thai Recession

“The rupiah continues to underperform the rest of the region” partly because government efforts to tackle the trade and current-account deficits are not expected to have much impact, said Roy Teo, a senior currency strategist at ABN Amro Bank NV in Singapore. “If we see signs that the trade and current-account balances are improving then we will be less bearish on the currency.”

Thailand’s baht had its first weekly loss in three on concern the nation’s recession will deter foreign inflows. Barclays Plc cut the country’s 2013 economic growth forecast to 2.5 percent from 3.5 percent, citing a domestic credit crunch, waning stimulus and lack of confidence after gross domestic product decreased in the first two quarters. Overseas sales fell in each of the three months through July.

“The economy is likely to remain on the downtrend in the second half due to the slowdown in exports,” said Thammarat Kittisiripat, an economist in Bangkok at TMB Bank Pcl. “The baht will depreciate and fund outflows in the short term will continue.”

Elsewhere, China’s yuan was little changed this week at 6.1202 per dollar, while South Korea’s won rose 0.2 percent to 1,073.65. Taiwan’s dollar advanced 0.3 percent to NT$29.656 and Vietnam’s dong was steady at 21,114.

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