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Friday, 21 November 2008
Asian Currencies Slide on Fears of Emerging-Market Asset Dumping
Asian currencies weakened against the US dollar yesterday, led by Indonesia’s rupiah, as the region’s stocks fell for a third day on speculation investors would dump emerging market assets as the global recession deepens.
Asian Currencies Slide on Fears of Emerging-Market Asset Dumping
Bloomberg 20 November 2008
Asian currencies weakened against the US dollar yesterday, led by Indonesia’s rupiah, as the region’s stocks fell for a third day on speculation investors would dump emerging market assets as the global recession deepens.
The rupiah, Asia’s biggest loser in the past month, slid to a decade low after a government report showed the country’s economy grew at the slowest pace in six quarters.
Six of the 10 most active currencies in Asia outside Japan declined yesterday as the MSCI Asia Pacific Index dropped to a three-week low.
“We’ve been seeing net selling of Asian stocks across the board by foreigners and outflows related to the stock market, which is a major factor in the currencies’ decline,” said David Mann, a senior strategist at Standard Chartered in Hong Kong.
“Asian currencies will stay weak going into the first half.”
The rupiah slid 2.1 per cent to 12,100 per US dollar, after touching 12,350, the weakest level since 1998.
“Growth remains the dominant concern for emerging-market Asia,” said Goh Puay Yeong, a Singapore-based currency strategist at Barclays.
The rupiah, which has slumped 20 per cent in the past month, may weaken to 12,500 per US dollar by the end of next month, Mr Goh said.
Malaysia’s ringgit fell 0.2 per cent to 3.6087 to a dollar.
The ringgit traded near its weakest level since 2006 as stocks declined on concern demand for the country’s exports would wane after its key overseas markets, the United States, Japan and Singapore, fell into a recession.
“Dollar-ringgit remains well supported despite further reports of smoothing activity by Bank Negara,” strategists at Standard Chartered said in a research note yesterday.
“The risk is that it may cut interest rates earlier than expected, given the worsening external environment and likely hit to exports.”
The yen rose against the dollar as speculation US lawmakers would fail to agree on a bailout for carmakers cut demand for higher-yielding assets bought with funds borrowed in Japan.
At mid-morning in New York, the dollar slid 0.2 per cent to 96.80 yen. The euro rose 0.9 per cent to 123.79 yen.
The euro was up 1.3 per cent at US$1.2780 after earlier hitting a session peak of US$1.2801.
“The focus at the moment is on concerns about the US car sector and fears that Congress will not be able to cobble something together,” said Steven Barrow, a currency strategist at Standard Bank in London. “That is helping to give the yen support.”
Vietnam’s dong and the Thai baht were little changed, trading at 16,977.5 and 35.02, respectively, against the US dollar.
The yuan closed at 6.8285, barely changed from 6.8284 late Tuesday.
The Taiwan dollar fell 0.1 per cent to NT$33.265 while South Korea’s won gained 0.1 per cent to 1446.5.
The Singapore dollar fell less than 0.1 per cent to S$1.5282.
The Indian rupee dropped 0.6 per cent to 49.93 and the Philippine peso climbed 0.2 per cent to 49.86.
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Asian Currencies Slide on Fears of Emerging-Market Asset Dumping
Bloomberg
20 November 2008
Asian currencies weakened against the US dollar yesterday, led by Indonesia’s rupiah, as the region’s stocks fell for a third day on speculation investors would dump emerging market assets as the global recession deepens.
The rupiah, Asia’s biggest loser in the past month, slid to a decade low after a government report showed the country’s economy grew at the slowest pace in six quarters.
Six of the 10 most active currencies in Asia outside Japan declined yesterday as the MSCI Asia Pacific Index dropped to a three-week low.
“We’ve been seeing net selling of Asian stocks across the board by foreigners and outflows related to the stock market, which is a major factor in the currencies’ decline,” said David Mann, a senior strategist at Standard Chartered in Hong Kong.
“Asian currencies will stay weak going into the first half.”
The rupiah slid 2.1 per cent to 12,100 per US dollar, after touching 12,350, the weakest level since 1998.
“Growth remains the dominant concern for emerging-market Asia,” said Goh Puay Yeong, a Singapore-based currency strategist at Barclays.
The rupiah, which has slumped 20 per cent in the past month, may weaken to 12,500 per US dollar by the end of next month, Mr Goh said.
Malaysia’s ringgit fell 0.2 per cent to 3.6087 to a dollar.
The ringgit traded near its weakest level since 2006 as stocks declined on concern demand for the country’s exports would wane after its key overseas markets, the United States, Japan and Singapore, fell into a recession.
“Dollar-ringgit remains well supported despite further reports of smoothing activity by Bank Negara,” strategists at Standard Chartered said in a research note yesterday.
“The risk is that it may cut interest rates earlier than expected, given the worsening external environment and likely hit to exports.”
The yen rose against the dollar as speculation US lawmakers would fail to agree on a bailout for carmakers cut demand for higher-yielding assets bought with funds borrowed in Japan.
At mid-morning in New York, the dollar slid 0.2 per cent to 96.80 yen. The euro rose 0.9 per cent to 123.79 yen.
The euro was up 1.3 per cent at US$1.2780 after earlier hitting a session peak of US$1.2801.
“The focus at the moment is on concerns about the US car sector and fears that Congress will not be able to cobble something together,” said Steven Barrow, a currency strategist at Standard Bank in London. “That is helping to give the yen support.”
Vietnam’s dong and the Thai baht were little changed, trading at 16,977.5 and 35.02, respectively, against the US dollar.
The yuan closed at 6.8285, barely changed from 6.8284 late Tuesday.
The Taiwan dollar fell 0.1 per cent to NT$33.265 while South Korea’s won gained 0.1 per cent to 1446.5.
The Singapore dollar fell less than 0.1 per cent to S$1.5282.
The Indian rupee dropped 0.6 per cent to 49.93 and the Philippine peso climbed 0.2 per cent to 49.86.
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