Sun, Jul 15, 2012 - Page 15 News List

Asian currencies nosedive in lockstep with markets

Bloomberg

Asian currencies fell for a second week as Chinese data added to signs the global economy is slowing, helping drive the worst five-day performance in regional stocks in almost two months.

South Korea’s won snapped a six-week winning streak after the central bank cut interest rates and trimmed its growth forecast for this year to 3 percent from 3.5 percent. China’s GDP increased by the slowest rate in more than three years in the second quarter, while imports missed economists’ estimates, damping the outlook for Asian exports.

The won weakened 1.1 percent since July 6 to 1,150.20 per US dollar in Seoul, according to data compiled by Bloomberg. The Philippine peso fell 0.5 percent to 41.98, Indonesia’s rupiah lost 0.5 percent to 9,448 and Thailand’s baht declined 0.1 percent to 31.66.

The Bank of Korea lowered its growth assessment after unexpectedly cutting its benchmark seven-day repurchase rate by 25 basis points to 3 percent on Thursday, the first reduction since February 2009. Bank Indonesia kept borrowing costs unchanged at 5.75 percent on the same day.

China, the world’s second-largest economy, grew 7.6 percent in the second quarter from a year earlier, compared with the 8.1 percent pace in the first three months and the median estimate in a Bloomberg survey for a 7.7 percent expansion, the statistics bureau said in Beijing yesterday.

The yuan fell 0.23 percent to 6.3789 per US dollar, the most since the five days ended June 1, according to the China Foreign Exchange Trade System. The central bank lowered the currency’s daily reference rate for a third day, by 0.05 percent to 6.3247.

The New Taiwan dollar completed its biggest weekly decline in a month as slower growth in China damped Taiwan’s export outlook.

The NT dollar fell 0.3 percent this week to close at NT$30.015 against its US counterpart in Taipei, according to Taipei Forex Inc. That was the biggest drop since the five days ended on June 1. The currency was little changed on Friday. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 3.7 percent.

The euro dropped to the lowest weekly level versus the US dollar in more than two years as investors sought safety amid concern Europe’s sovereign-debt turmoil is worsening.

The yen rose for a third week against the greenback, the longest winning stretch in almost a year. The euro pared its loss versus the dollar on Friday amid speculation global central banks will take further action to sustain faltering economic growth. US Federal Reserve Chairman Ben Bernanke will testify to the US Congress next week about the US outlook.

The euro declined 0.3 percent to US$1.2249 on Friday in New York, from US$1.2291 on July 6 and the lowest on a weekly basis since June 11, 2010.

The shared currency dropped 0.9 percent to ¥96.98. The Japanese currency appreciated 0.6 percent to 79.18 per US dollar, completing its longest stretch of five-day gains since the four weeks ended July 29, 2010.

The British pound reached its strongest level since November 2008 versus the euro after the Bank of England released details on Friday of a new lending program it said may boost credit to companies and households by at least £80 billion (US$124 billion). Sterling touched £0.7857 to the euro and ended the week at £0.7865, up 0.9 percent.

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