Sun, Aug 12, 2007 - Page 10 News List

Regional currencies fall as investors cut risk exposure

BLOOMBERG AND CNA , TAIPEI

Asian currencies fell this week on signs the US subprime mortgage crisis is spreading, prompting global investors to cut riskier investments.

The South Korean won led declines, leading a finance ministry official to say the government is monitoring any "psychological impact" the housing contagion may have on the economy. The Philippine central bank said it's ready to "maintain stability." The Indonesian rupiah weakened to a one-year low.

"There's reverberations from subprime all over the world, and Asia won't be inoculated from the turmoil given all the foreign money in the region," said Sean Callow, senior foreign-exchange strategist at Westpac Banking Corp in Singapore.

NEW TAIWAN DOLLAR

The New Taiwan dollar lost ground against the US dollar on the Taipei Foreign Exchange on Friday, shedding NT$0.08 to close at NT$32.965.

A total of US$828 million changed hands during the day's trading.

The US currency opened at NT$32.790 and fluctuated between NT$32.785 and NT$32.971.

SOUTH KOREAN WON

The South Korean won declined 1 percent this week to 931.90 against the US dollar, according to Seoul Money Brokerage Services Ltd. It last traded lower on June 13. The Philippine peso fell 0.9 percent in the five days to 45.745 and the Indonesian rupiah 0.8 percent to 9,349.

BNP Paribas SA Aug. 9 joined Bear Stearns Cos and Union Investment Management GmbH in stopping redemptions from a number of its funds. Santa Monica, California-based Anworth Mortgage Asset Corp, which invests in mortgage-backed securities, said it may have to sell most of the holdings of its Belvedere Trust unit because lenders want their money back.

"There could be an economic effect and a psychological effect from the subprime mortgage issue," Hur Kyung-wook, director-general at the Korean finance ministry's international finance bureau, said in an interview with BBS radio from Seoul.

Regional stocks slumped, with the Morgan Stanley Capital International Asia Pacific Index down 2.5 percent in the week. Global funds sold more South Korea stocks than they bought on Friday, according to the stock exchange.

Elsewhere this week, the Malaysian ringgit fell 0.5 percent to 3.4790, the Singapore dollar declined 0.2 percent to S$1.5211, and the Thai baht dropped 0.7 percent onshore to 34.08.

"The region remains at the mercy of money and credit markets for the time being," said Ben Simpfendorfer, a foreign-exchange strategist at Royal Bank of Scotland in Hong Kong, in a research note. Even so, "it's worth emphasizing that the region's fundamentals remain strong."

Singapore's economy grew at the fastest pace in two years in the second quarter, rising 14.4 percent from a revised 8.8 percent pace in the first quarter, the trade ministry said on Friday.

South Korea unexpectedly raised interest rates this week to 5 percent to curb inflation as the economy accelerates.

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