Asian currencies, euro flattened by worry over Cyprus

Bloomberg

Sun, Mar 24, 2013 - Page 15

Asian currencies dropped for a fifth week, the longest losing streak since June, as Cyprus’ lawmakers debated measures needed to get a bailout, fueling concern Europe’s debt crisis would worsen.

Overseas investors pulled US$2.4 billion from Taiwanese, South Korean and Thai stocks in the first four days of this week, exchange data show. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, dropped 0.15 percent since March 15.

Cypriot lawmakers after Asian trading hours on Friday approved capital controls and legislation to wind down banks as they scrambled to secure a European bailout and avert a financial collapse.

“Investors remain concerned the Cyprus issue hasn’t been resolved, which is keeping them from investing in emerging-market assets,” said Jeon Seung-ji, an analyst at Samsung Futures Inc in Seoul.

The New Taiwan dollar lost 0.5 percent this week to close at NT$29.909 against the greenback in Taipei, while the won fell 0.7 percent to 1,119.28 per US dollar in Seoul, according to data compiled by Bloomberg.

The NT dollar fell for a fourth week on signs that Taiwan’s economic recovery was slowing. Export orders slumped last month by 14.5 percent from a year earlier, more than the 3 percent drop economists surveyed by Bloomberg estimated, official data showed on Wednesday. Industrial production probably contracted last month for the first time since June, according to another Bloomberg survey before a report due tomorrow.

The won touched the weakest level since September on Wednesday after South Korean Ministry of Finance and Strategy director-general Eun Sung-soo said Seoul would consider “various” financial taxes if needed to curb capital flows.

Indonesia’s rupiah declined 0.4 percent to 9,743 per US dollar, while the Philippine peso dropped 0.6 percent to 40.850. China’s yuan touched a 19-year high on Wednesday during US Treasury Secretary Jack Lew’s visit to Beijing amid optimism the economy is improving. The currency was little changed at 6.2122 per US dollar this week.

India’s rupee fell 0.6 percent this week to 54.3425 per US dollar, according to data compiled by Bloomberg. Thailand’s baht rallied 0.9 percent to 29.28, Malaysia’s ringgit strengthened 0.4 percent to 3.1121 and Vietnam’s dong rose 0.1 percent to 20,940.

Meanwhile, the euro fell by the most in three weeks versus the US dollar amid concern over Cyprus and as data suggested economic growth in the region had failed to accelerate.

A composite index based on a survey of purchasing managers in the eurozone services and manufacturing industries fell to 46.5 from 47.9 last month, Markit Economics said on Thursday. Analysts had forecast a reading of 48.2, according to the median of 23 estimates in a Bloomberg survey. A reading below 50 indicates contraction.

The euro fell 0.7 percent to US$1.2989 and touched US$1.2844 on March 19, the weakest level since Nov. 22. It fell 1.5 percent to ¥122.73. The yen gained 0.9 percent to ¥94.46 per US dollar.

“In terms of headline risk, clearly Cyprus has been dominant,” Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas SA in New York, said in a telephone interview on Friday. “For the euro, we had disappointing numbers. The euro has been quite resilient, and I think actually the most remarkable aspect is that the euro has held up quite well, despite all the negative news.”

The British pound gained for a second week against the greenback as some Bank of England policymakers said further easing may cause “unwarranted” currency weakness. The yen appreciated by the most since November as Bank of Japan Governor Haruhiko Kuroda failed to announce fresh stimulus.

Sterling gained 0.8 percent to US$1.5230, its second weekly advance. The currency touched US$1.4832 on March 12, its weakest level since 2010.