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FOREIGN EXCHANGE: Stock sales sap regional currencies

South Korea's won led declines in Asian currencies this week as overseas investors sold more of the nation's stocks than they bought for a ninth day, the longest stretch in almost a month.

The won fell to its lowest level in four months on Friday on concern credit-market losses will slow economic growth in the US, South Korea's second-biggest export market. Overseas sales account for about 40 percent of South Korea's economy. The won is the second-worst performer of the 10 most-actively traded currencies in Asia outside Japan this year, after the Indonesian rupiah.

"Stock sales are the biggest reason for the won's slide," Yuji Kameoka, a senior economist and currency analyst at Daiwa Institute of Research in Tokyo, said on Friday.

Speculation that the US economy will slow because of subprime issues raised concern it will spread to other countries and that discourages investment into Asia, Kameoka said.

The won weakened 1.1 percent this week to 940.70 against the US dollar, declining for a second week, Seoul Money Brokerage Services Ltd said.

Foreign investors were net sellers of equities in Taiwan, Thailand, Philippines and Indonesia this week, according to data from the stock exchanges, weighing on regional currencies. The MSCI Asia Pacific Index of regional equities dropped for a second week, falling 1.9 percent.

The New Taiwan dollar fell 0.3 percent for the five-day period to NT$32.485, Taipei Forex Inc said.

The Indonesian rupiah had its largest weekly loss since Nov. 16, falling 1 percent to 9,428, and the Singapore dollar dropped 1 percent from Dec. 14 to S$1.4573, data compiled by Bloomberg show.

The Philippine peso weakened 0.7 percent to 41.51 per US dollar, the first weekly loss since Nov. 16, said Tullett Prebon Plc, the world's second-largest inter-dealer broker. The Thai baht fell 0.3 percent for the week to 33.70 in onshore trading.

"Foreign investors seem to have taken the money out from the region because of weak performances of the stocks and as the year-end is approaching," said Hideki Hayashi, a foreign-exchange strategist at Shinko Securities Co in Tokyo. "The outlook is not bad for the regional currencies and they may change course soon."

Nine out of the 10 Asian currencies declined for the week as traders decreased bets the Federal Reserve will lower the benchmark interest rate next month, boosting the allure of dollar assets.

Malaysia's ringgit declined this week as Asian stocks slumped. The currency halted a four-week rally as the nation's benchmark share index slid for a second week on speculation a housing recession will spread in the US. Bear Stearns Cos on Thursday reported a first-ever loss after writedowns on securities tied to subprime mortgages.

The currency depreciated 0.9 percent to 3.3480 from a week ago, data compiled by Bloomberg show. The weekly slide was the most since the five-day period ended Nov. 16.

The Vietnamese dong fell 0.1 percent to 16,050 this week.
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