Asian currencies declined this week, led by the South Korean won, after data in China failed to meet analysts’ expectations, damping optimism for a revival in regional exports.
The Bloomberg-JPMorgan Asia Dollar Index dropped, ending a four-week run of gains, as overseas sales in China extended a slump last month and lending slowed to at least a quarter of the previous month’s pace. The Shanghai Composite Index of stocks has retreated 12 percent since reaching a 14-month high on Aug. 4 and posted its worst week since February.
A government report on Thursday showed US retail sales unexpectedly declined.
“The global economic recovery story is not set in stone yet,” said Penn Nee Chow, an economist at United Overseas Bank Ltd (大華銀行), Singapore’s second-largest lender. “Asian currencies would generally be more downcast. A lot of the economies are looking to China to spur their own economies.”
The won fell 1.2 percent this week to 1,239.13 per dollar in Seoul, according to data compiled by Bloomberg. The Indian rupee dropped 1 percent to 48.31 in Mumbai. The Asia Dollar gauge declined 0.4 percent.
The New Taiwan dollar lost 0.3 percent from last Friday to NT$32.895.
The yen had its biggest weekly gain in a month against the greenback before the US makes US$79.2 billion in redemption and coupon payments for Treasuries tomorrow, according to estimates from Bank of Tokyo-Mitsubishi UFJ Ltd. The Japanese currency traded at ¥94.87 per dollar from ¥97.57 in New York at the end of last week.
The won had its first weekly loss in a month after Moody’s Investors Service said on Aug. 11 that the nation’s companies may struggle to sustain “encouraging” results as appreciation in the currency hurts exports, the global recession lingers and government stimulus spending is reined in.
The won has strengthened 3.6 percent in the past seven weeks, the best performance among Asia’s 10 most-traded currencies, as overseas investors bought more Korean shares than they sold on all but five days since the beginning of July.
Indonesia’s rupiah was little changed, trading near a nine-month high, as the Jakarta Composite Index of equities pared a weekly gain. Funds based abroad bought US$194 million more local stocks than they bought so far in August, taking net purchases for 2009 to US$1 billion.
The currency reached 9,850 a dollar on Aug. 4, its strongest level since October. It traded at 9,960 in Jakarta on Friday, compared with 9,965 at the end of last week.
Elsewhere, Malaysia’s ringgit dropped 0.3 percent to 3.5180 and the Singapore dollar declined 0.4 percent to S$1.4433. The Philippine peso slid 0.6 percent to 48.048. The Thai baht traded at 34.03 versus 33.94 last Friday.
The euro fell for the first week in more than a month against the yen as a decline in a US consumer sentiment index outweighed a report showing the 16-nation region’s economy shrank less than economists predicted.
The euro snapped a two-day rally against the Japanese currency on Friday as a report showing an unexpected drop in US consumer confidence damped investors’ appetite for riskier currencies. The European legal tender pared most of its increase on Thursday versus the US dollar, which was triggered by a report showing GDP in the region contracted 0.1 percent in the first quarter.
“The risk trade is still relevant,” said Jessica Hoversen, a foreign-exchange analyst at MF Global Ltd in Chicago. “We are moving into a paradigm where fundamentals are more important, and we saw that with European GDP.”
The euro depreciated 2.6 percent this week to ¥134.84 as of the close in New York on Friday, from ¥138.41 last Friday, in its first weekly loss since the five days ended July 10. The euro was little changed at US$1.4203, from US$1.4183 last Friday.
The yen appreciated 2.8 percent to ¥94.94 per dollar, from ¥97.57.
The yen rose against all 16 of its most-traded counterparts this week, gaining the most against the currencies of commodity producers Canada and Brazil.
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