Sun, Aug 05, 2007 - Page 10 News List

Regional currencies follow stocks lower

AGENCIES , NEW YORK AND TAIPEI

Asian currencies completed a weekly decline, led by a 0.9 percent loss in the Indonesian rupiah, as overseas investors reduced holdings in the region's stocks.

Global funds were net sellers of shares in Taiwan, South Korea and Thailand this week as benchmark equity indexes fell. Indonesia's central bank said on Wednesday it's not worried by the rupiah's weakness and the IMF said the next day the volatility in financial markets posed a risk to economic growth.

"Investors are still cautious on the region, given there is still equity selling," said Ben Simpfendorfer, a foreign-exchange strategist at Royal Bank of Scotland in Hong Kong. "The shakeout so far hasn't been too extensive."

The New Taiwan dollar lost ground against the US currency on the Taipei Foreign Exchange on Friday, shedding NT$0.007 to close at NT$32.871. A total of US$689 million changed hands during the day's trading.

The US currency opened at NT$32.805 and fluctuated between NT$32.775 and NT$32.880.

The US dollar fell against the yen, to ?118.02, compared with ?119.19 late on Thursday.

The Indonesian rupiah fell to 9,274 per US dollar, from 9,195 at the start of the week. The Singapore dollar slipped 0.3 percent to S$1.5185, the biggest five-day loss in almost two months, and the Malaysian ringgit weakened 0.1 percent to 3.4610.

The won also slid as the Bank of Korea said on Friday it would restrict companies from borrowing in foreign currencies, trying to cool a 0.7 percent gain this year. A stronger currency threatens exports, which account for 40 percent of the economy, by making them more expensive to overseas buyers.

"It's a good move, as they're trying to take active measures without disturbing the market too much," said Steve Rowles, an analyst with CFC Seymour in Hong Kong. "The exporters are all up in arms about the currency and these sort of actions may slow the won down a bit."

Separately, South Korean Finance Minister Kwon Okyu said on Friday that so-called carry trades, where investors borrow in the yen and invest elsewhere, are "a potential threat to the international financial markets and there is a need for a global reaction."

Japan's benchmark overnight lending rate is 0.5 percent, compared with 4.75 percent in South Korea. The won has risen 1 percent versus the yen this year.

The Thai baht fell 0.1 percent onshore yesterday to 33.85, taking the loss for the week to 0.4 percent, as Finance Minister Chalongphob Sussangkarn said Thailand's central bank may be able to cut borrowing costs as inflation slows.

The Philippine peso rose 0.6 percent in the five days to 45.455 as central bank Deputy Governor Diwa Guinigundo said gains aren't affecting export competitiveness and economic growth may accelerate to 6.8 percent next year from between 6.1 percent and 6.7 percent this year.

Elsewhere, the Vietnam dong lost 0.1 percent to 16,160.00.

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