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Sun, May 04, 2008 - Page 10 News List

Won declines to six-week low as dollar recovers

BLOOMBERG AND CNA , TAIPEI

South Korea’s won fell to a six-week low, leading declines in Asian currencies, on concern the central bank will lower interest rates as growth slows in Asia’s fourth-biggest economy.

The won reached the lowest since March 20 as the US currency posted its first monthly advance this year last month against the euro on speculation the US Federal Reserve is done with cutting rates, halting South Korea’s widening yield advantage. The won is the worst performer this year of the 10 most-traded currencies in Asia outside Japan. The Philippine peso completed a three-week slide to the lowest in more than five months on the nation’s deteriorating budget deficit.

“On one hand, you have a rally in the dollar as the over- pessimistic view on the US economic outlook and interest rates has eased,” said Minoru Shioiri, a senior manager of currency trading at Mitsubishi UFFJ Securities Co in Tokyo. “On the other hand, you see Korean growth slowing and its economy is feeling the negative impact from the US slowdown, encouraging won selling.”

The won completed a 1.4 percent drop this week to 1,009.65 against the US dollar, according to Seoul Money Brokerage Services Ltd. The peso fell 0.7 percent to 42.345 in Manila for a third straight week of losses, according to the Bankers’ Association of the Philippines.

The New Taiwan dollar shed NT$0.006 to close at NT$30.455 against the greenback on the Taipei Foreign Exchange on Friday.

A total of US$803 million changed hands during the day’s trading. The US currency opened at NT$30.475 and fluctuated between NT$30.430 and NT$30.484.

The peso weakened on concern higher fuel and food prices will stoke inflation and swell import costs, weighing on state finances as the government reported a fourth month of budget deficit in March.

The peso may weaken to between 42.40 and 42.50 within a month, he said.

Indonesia’s rupiah posted a third week of declines after inflation in Southeast Asia’s biggest economy accelerated at an annual rate of 9 percent last month, the fastest in 19 months, the Central Statistics Bureau said on Friday.

The currency reached an almost seven-week low of 9,275 this week before trading at 9,226 per dollar in Jakarta, according to Bloomberg data. Foreign investors were net sellers of local stocks last month, stock exchange data show.

Malaysia’s ringgit slipped to 3.1640 per dollar in Kuala Lumpur for a 0.2 percent loss on week as local stocks snapped a three-week rally and the dollar headed for a second week of gains against the euro.

Thailand’s baht was little changed at 31.72 per dollar. The Vietnamese dong was at 16,115 versus 16,118 a week ago and the Singapore dollar was unchanged at S$1.363.

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