Asian Currencies Decline on Slowdown Concern

Asian currencies declined this week, led by India’s rupee and Malaysia’s ringgit, on concern Europe’s sovereign-debt crisis and a faltering U.S. economic recovery will hurt exports and deter investment in emerging markets.
Overseas investors pulled $1.85 billion fr
om shares in South Korea and Taiwan over the last five days, exchange data show. Greece will default on its debt and Portugal and Ireland are likely to suffer the same fate, Martin Feldstein, former president of the U.S.-based National Bureau of Economic Research, said July 14. Data this week showed American consumers are the least confident in more than two years and retail sales in the world’s biggest economy stagnated in June.
“There’s negative sentiment from what’s happening in the euro zone and the U.S.,” said Ho Woei Chen, a Singapore-based economist at United Overseas Bank Ltd. “Concern about government debt in the euro zone will continue to crop up.”
The rupee fell 0.4 percent this week to 44.52 per dollar in Mumbai, according to data compiled by Bloomberg. The ringgit weakened 0.5 percent to 3.0063. The Philippine peso slid 0.45 percent to 42.938, the Taiwan dollar lost 0.4 percent to NT$28.897 and Indonesia’s rupiah retreated 0.3 percent to 8,544.
Europe’s sovereign-debt crisis spread to some of the region’s larger economies this week, with Italy and Spain’s 10- year bond yields climbing to their highest levels in at least a decade. Moody’s Investors Service slashed debt ratings for Portugal and Ireland to below investment grade, or so-called junk, in the past two weeks.

Foreign Selling

Taiwan’s dollar retreated for a second week as global funds sold $1.2 billion more of the island’s shares than they bought.
“Investors are still concerned recoveries in the U.S. and Europe are not going well,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Foreign funds have sold a lot of stocks recently, dragging down the Taiwan dollar.”
The peso fell for the first week in four after exports unexpectedly declined in May. Exports dropped 3.2 percent from a year earlier, compared with the median forecast for a 4.3 percent gain in a Bloomberg survey of economists, data showed July 12.
The Bank of Korea lowered its economic growth forecast for this year on an expected slowdown in domestic demand. South Korea’s economy will expand 4.3 percent, compared with the 4.5 percent growth estimated in April, the central bank said yesterday. The won lost 0.1 percent over the week to close at 1,057.95 per dollar in Seoul.
Elsewhere, Singapore’s dollar and China’s yuan were little changed at S$1.2192 and 6.4650, respectively. Thailand’s baht strengthened 0.5 percent.