Asian currencies declined this month, led by South Korea’s won, as overseas funds dumped stocks on concern that slowing global growth will damp demand for Asian exports just as central banks grapple with quickening inflation.
The won posted its biggest monthly decline since August 1998, Malaysia’s ringgit had its worst month since the end of a dollar link in 2005 and Taiwan’s dollar posted its biggest loss in seven years. Weakening currencies threaten to push up the cost of imports and accelerate inflation while decreasing demand for exports puts pressure on trade and current-account balances.
“It’s been a bad environment for stocks with persistent inflation eroding the value of assets and people have been disappointed with the growth numbers coming out of the region,” said Sean Callow, senior currency strategist at Westpac Banking Corp in Sydney. “With that comes a fading of confidence in currencies in the region as well.”
South Korea’s currency dropped 0.7 percent to 1,089 against the dollar as of the 3pm local close on Friday, according to Seoul Money Brokerage Services Ltd, taking the decline for this month to 7.1 percent, Asia’s worst performer. The ringgit, the second-biggest loser in the region, fell 4.1 percent this month and the New Taiwan dollar dropped 2.6 percent.
The New Taiwan dollar fell on concern that cooling demand in the US and Europe will hurt the nation’s exports, which account for half of the GDP. The government cut its economic growth forecast and reported the smallest increase in export orders in five years.
The NT dollar declined 0.1 percent to NT$31.520 per US dollar on Friday, according to Taipei Forex Inc.
The currency, which touched a six-month low of NT$31.571 on Tuesday, has dropped 0.5 percent this week and 2.6 percent since the end of last month.
Overseas investors sold more stocks than they bought this month in Taiwan, South Korea, Thailand, the Philippines and Indonesia, according to data compiled by Bloomberg. Global funds were so-called net sellers of Korean shares on Friday for a ninth day, stock exchange data showed.
Malaysia’s ringgit fell to near the lowest in 11 months on speculation heightened political turmoil will prompt investors to sell the country’s stocks.
The ringgit traded at 3.3935 per US dollar versus 3.3400 a week ago, according to data compiled by Bloomberg. The currency reached 3.3975 on Wednesday, the weakest since October.
The Thai baht fell 0.5 percent on Friday to 34.20, according to data compiled by Bloomberg.
Elsewhere, Singapore’s dollar lost 3.4 percent this month, and Indonesia’s rupiah dropped 0.6 percent. The Philippine peso declined 3.8 percent. Vietnam’s dong gained 1.4 percent this month.