Asian Currencies Drop, Led by Won, Peso, as China Cools Lending
By Lilian Karunungan and Bob Chen
Aug. 31 (Bloomberg) -- Asian currencies were set for a monthly loss, led by the South Korean won, Philippine peso and Indian rupee, as speculation China is seeking to curb lending raised concern that export demand will slow.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-traded currencies in the region, fell 0.6 percent, the most since February, after China’s State Council said last week it’s studying ways to reduce overcapacity in industries such as steel and cement. The won declined today as overseas investors sold more Korean shares than they bought for the first time in seven days, sending the benchmark stock index lower.
“There’s questions on how sustainable the Chinese recovery is, especially as policy makers seem to be a bit more balanced and not leaving the policy taps on at full blast,” said Daniel Hui
, a currency strategist for HSBC Holdings Plc in Hong Kong. “There is some skepticism as to how much the region will get a boost from China.”
South Korea’s won fell 0.2 percent to 1,247.15 per dollar as of 12:26 p.m. in Seoul, according to data compiled by Bloomberg. It’s down 1.5 percent from the end of last month. The rupee lost 1.5 percent for the month to 48.6650 and the peso weakened 1.5 percent to 48.805. The ringgit dropped 0.2 percent to 3.5200 as of Aug. 28.
Local financial markets in Malaysia and the Philippines are closed today for public holidays. The Indonesian rupiah dropped 0.2 percent to 10,073 in Jakarta, for a monthly decline of 1.2 percent.
China’s economic growth may start to slow in the second quarter of next year, Ba Shusong, deputy director of the State Council’s Development Research Center, said on Aug. 29. Lending dropped to 355.9 billion yuan ($52 billion) in July, a quarter of levels the previous month. A record $1.1 trillion was dished out in the first half, helping support the nation’s $585 billion economic stimulus spending.
The world’s third-largest economy may have made 200 billion yuan of new loans in August, Caijing Magazine reported today on its Web site, without citing anyone. About 100 billion yuan may have left the nation’s stock markets in July and August, the Beijing-based magazine reported. The Shanghai Composite Index
dropped 4.8 percent today, taking a loss this month to 20 percent, the worst performance since October.
The yen strengthened against all 16 of the world’s major currencies after the opposition Democratic Party of Japan swept to power in the nation’s general election yesterday, spurring optimism the new government may stimulate the economy.
The Japanese currency climbed to 132.47 per euro in Tokyo from 133.85 in New York on Aug. 28. It rose 1 percent to 92.65 per dollar. Korea’s won dropped 1.3 percent to 13.474 against the yen from 13.292 at the end of last week.
“There may be a bit of repatriation from Japanese investors,” said Thomas Harr
, a currency strategist at Standard Chartered Plc in Singapore. “The Japanese election outcome is definitely bullish for the yen.”
Korea’s won declined today as the Kospi share index
slid 1.5 percent before a government report tomorrow that may show exports fell 20.7 percent in August from a year earlier, a 10th straight decline, according to a Bloomberg News survey of economists. Thailand reports data for overseas sales, manufacturing and the current-account balance today. Indonesia issues its figures tomorrow.
Taiwan’s dollar was poised for a monthly loss after overseas shipments slumped for an 11th month in July as a global recession forced consumers around the world to cut spending. Data for August are due on Sept. 7.
The island’s currency was little changed today on speculation policy makers will prevent gains to protect sales for local companies.
“The authorities are trying to hold down the currency as they want to support exporters,” said Janet Lin
, a foreign- exchange trader at Taiwan Business Bank in Taipei. “Overseas shipments are still not as strong as they would like to see.”
Taiwan’s dollar traded at NT$32.904 versus the greenback in Taipei, versus NT$32.925 on Aug. 28, according to Taipei Forex Inc. It weakened 0.1 percent this month and may trade between NT$32.50 and NT$33.30 by year end, Lin said.
The Central Bank of the Republic of China sold the local dollar to curb its appreciation, the Commercial Times reported on Aug. 13. Central banks can try to influence exchange rates by buying or selling foreign currency.
Elsewhere, the Singapore dollar weakened 0.2 percent today to S$1.4419, trading little changed from the end of July. The Thai baht was at 34.01, the same rate as on Aug. 28 and July 31.
To contact the reporters on this story: Lilian Karunungan
in Singapore at at email@example.com
Last Updated: August 30, 2009 23:46 EDT