Sun, May 29, 2011 - Page 10 News List

Asian currencies drop on European debt concerns

Bloomberg

Asian currencies completed a weekly decline, led by the Malaysian ringgit and the New Taiwan dollar, as the worsening European debt crisis reduced demand for emerging-market assets.

The MSCI Asia-Pacific Index of shares posted its fourth weekly loss as overseas investors sold US$1.6 billion more South Korean, Taiwanese and Thai equities than they bought in the first four days of the week. Luxembourg Prime Minister Jean-Claude Juncker said on Thursday the IMF might not release its portion of aid for Greece next month.

“With the European debt problems, which dragged the stock markets lower, Asian currencies also saw downward pressure,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Capital -Markets Co in Tokyo. “But whenever there’s risk-on sentiment, the currencies strengthen as the region’s economic growth is still outpacing other regions.”

The New Taiwan dollar dropped 0.4 percent to NT$28.888 against the US currency this week.

The ringgit slid 0.5 percent to 3.034 per US dollar in Kuala Lumpur, according to data compiled by Bloomberg. The Philippine peso fell 0.3 percent from a week ago to 43.37 and India’s rupee weakened as much to 45.165. The Indonesian rupiah declined 0.4 percent to 8,573 and the Singapore dollar was 0.1 percent lower at S$1.2373.

The NT dollar completed its biggest five-day loss since March 11 as foreign funds trimmed holdings of the nation’s stocks on concern a slowdown in China’s economy will hurt demand for exports.

The currency fell to a one-month low earlier this week after the government reported industrial production grew 6.9 percent last month from a year earlier, the slowest gain since September 2009. The NT dollar rose 0.2 percent on Friday on speculation exporters were repatriating income.

A Chinese manufacturing index compiled by HSBC Holdings PLC and Markit Economics fell to its lowest level in 10 months this month, data this week showed. The world’s second-biggest economy took around 40 percent of Taiwan’s exports last month, according to official data.

“Foreigners have been selling Taiwan stocks this week on concern China’s economy will cool,” said Henry Lin (林弘立), a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank (新光銀行). “Exporters are -taking -advantage of relatively weaker levels to sell the US dollar.”

Elsewhere, the Thai baht fell 0.3 percent for the week to 30.38 per US dollar, according to data compiled by Bloomberg. South Korea’s won gained 0.1 percent to 1,082.25, while China’s yuan advanced 0.02 percent to 6.4917.

The US dollar fell for a second week against its major trading partners as reports showing growth cooled in the US fueled speculation the recovery of the world’s biggest economy may be stagnating.

New Zealand’s currency approached a record high after China Investment Corp said it would buy the nation’s bonds. The Swiss franc rose to its strongest against the euro and the dollar as speculation increased Greece may need to restructure its debt, increasing -demand for safety. US employment growth slowed this month, a report next week is forecast to show.

“We’ve had some disappointing data, and it has weighed on the dollar,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp, the world’s largest custodial bank, with more than US$20 trillion in assets under administration. “There are so many fleas on that dog — no one necessarily wants to hold dollars for longer than they have to, and the Swiss franc is benefiting from that.”

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