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New Taiwan dollar, yuan drop on slowdown, stocks

Asian currencies fell this week, led by the New Taiwan dollar and the yuan, after reports showed exports in the region slumped because of recessions in the US, Europe and Japan.

Eight of the region’s 10 most-traded currencies excluding the yen dropped this week as investors became net sellers of shares from South Korea, Thailand and the Philippines. The South Korean won, Malaysia’s ringgit and Singapore’s dollar fell after manufacturing in China, the fastest-growing major economy, shrank by the most on record.

“Attention has been on the trade numbers” and that is likely to see the Taiwan dollar weaken further, said Maya Pinto, an economist at IDEAglobal in Singapore. “We’ve seen foreigners exiting the stock market in the past three sessions.”

The NT dollar declined 0.8 percent to NT$33.549, according to Taipei Forex Inc, after reaching NT$33.612, the weakest level since Oct. 28. The yuan’s five-day 0.7 percent drop to 6.8812 is the steepest since its dollar peg was scrapped in July 2005.

The ringgit fell 0.4 percent to 3.6350, near the lowest in more than two years.

Taiwan’s exports dropped 12.4 percent last month from a year earlier, the most since February 2002, according to a Bloomberg News survey of economists before the Ministry of Finance report tomorrow.

Taiwan Semiconductor Manufacturing Co (台積電), the largest producer of chips designed by other companies, on Monday cut sales and profit forecasts for this quarter, while rival United Microelectronics Corp (聯電) on Thursday asked employees not to forgo vacations for pay to save costs.

The Chinese yuan posted a weekly decline on speculation US Treasury Secretary Henry Paulson’s calls for a stronger currency won’t stop China from weakening it to support exporters.

The won lost 0.4 percent to 1,475.50 per dollar, extending a four-month slide as overseas investors pulled US$37 billion out of local shares this year, according to Bloomberg data.

Indonesia’s rupiah capped its best week in more than seven years, rising 3.4 percent to 11,705 a dollar, on speculation a surprise central-bank cut in borrowing costs on Thursday would revive appetite for the nation’s securities.

Bank Indonesia lowered its benchmark reference rate for bill sales to 9.25 percent from 9.5 percent to shield Southeast Asia’s biggest economy from the global recession. The central bank slashed its growth forecast for 2009 to 4.5 percent, the slowest in seven years.

Elsewhere, Thailand’s baht dropped 0.4 percent this week to 35.65 a dollar, Singapore’s dollar weakened 0.9 percent to S$1.5225 and the Philippine peso weakened 0.3 percent to 49.08. The Vietnamese dong was little changed at 16,978.50.

The British pound posted a weekly drop against the euro and the dollar and 10-year government bonds rose by the most in a decade after the Bank of England cut its key interest rate two days ago to the lowest level since 1951.

The pound, which strengthened on Friday versus the euro, slid to a record low against the currency on Thursday, and weakened against all but one of its 16 most-actively traded peers in the week. Policymakers lowered their main rate by 1 percentage point to 2 percent as the global financial crisis pushed the British economy into a recession.

The pound strengthened to £0.8653 per euro late on Friday in London, trimming its weekly drop to 4.6 percent. It earlier lost 5.5 percent in the five days, the most since the debut of the European common currency in 1999. Against the dollar, the pound traded at US$1.4624, from US$1.4680 a day before, for a weekly decline of about 5 percent, the most since the period ended Nov. 14.

The Bank of England will cut its key interest rate to 1.25 percent by September, economists said in a Bloomberg survey.

The US dollar on Friday rose to ¥93.12 from ¥92.34. A week ago, it bought ¥95.65.

In other New York trading, the greenback rose to 1.2224 Swiss francs from SF1.1960, and edged up to C$1.2797 from C$1.2772 late on Thursday.
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