Won, Ringgit Lead Drop in Emerging Currencies as Yield Bid Wanes

  • Gauge of developing-nation currencies declines for third day
  • ‘Dollar strength is returning,’ INTL FCStone’s Wu says

The South Korean won and Malaysian ringgit led declines in emerging-market currencies as concern about the financial health of Germany’s biggest lender sapped demand for higher-yielding assets.

A gauge of developing-nation foreign-exchange dropped for a third day as better-than-expected U.S. economic data bolstered bets the Federal Reserve will raise interest rates by year-end. Equities fell around the world and the dollar strengthened.

“Dollar strength is returning coupled with the drop in U.S. stocks,” said Wu Mingze, a foreign-exchange trader in Singapore at INTL FCStone Inc., a Nasdaq-listed global payments-service provider. “U.S. data will continue to dominate as speculators look towards December as the key date for a rate hike.”

The won declined 0.5 percent to 1,103.73 per dollar as of 10:03 a.m. in Hong Kong after weakening as much as 0.7 percent. The ringgit fell 0.5 percent to 4.1430 per dollar, extending this month’s decline to 2.2 percent. The MSCI Emerging Markets Currency Index slipped 0.2 percent.

Bank Concerns

Deutsche Bank AG shares slid to a record in the U.S. as Bloomberg News reported that some hedge funds have reduce their exposure to the company. Fellow German lender Commerzbank AG said Thursday it would cut one in five of its employees and suspend dividend payments.

“The appetite for riskier assets has weakened on worries over euro-zone banks,” said Min Gyeong-won, a currency analyst at NH Futures Co. in Seoul. “The won’s fall will likely be limited though, as we will probably see month-end dollar sales by exporters.”

South Korean bonds rose for a fourth day, with the three-year yield dropping four basis points to 1.26 percent. Ten-year fell three basis points to 1.42 percent.

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