Asian currencies fall on share sales

Asian currencies fell against the greenback, led by South Korea’s won and Indonesia’s rupiah, on concern that a deepening global economic slump would curb demand for the region’s equities and exports.

The won, Asia’s worst performer this year with a 32 per cent loss, slumped as global funds cut holdings of local stocks. All of the 10 most-active Asian currencies outside Japan dropped as shares tumbled across the region, extending a global stocks rout that has wiped out more than $10 trillion of market value worldwide in the past month.

South Korea’s currency declined 3.3 per cent to 1,363 a dollar as of the 3 pm close in Seoul, according to Seoul Money Brokerage Services. Global funds sold more Korean shares than they bought for a sixth day, according to Korea Exchange, and the Kospi stock index dropped 5.1 per cent.

“Demand for dollars outweighs supplies as foreign investors keep selling stocks and importers accelerate their purchases,’’ said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “The central bank may intervene to block the dollar from rising above 1,400.’’
 

GAINERS & LOSERS Currency per dollar
	Jan 02, 2008	Oct 22, 2008	% change
Korean won	925.65	1362.92	-47.24
Pakistani rupee	60.9	81.42	-33.70
Indian rupee	44.23	49.3	-11.44
Indonesian rupiah	8985	9895	-10.13
Taiwan dollar	32.4	32.98	-1.08
Malaysian ringgit	3.53	3.55	-0.45
Hong kong dollar	7.78	7.75	0.36
Singapore dollar	1.53	1.5	2.12
Thai baht	35.41	34.51	2.54
Japanese yen	118.85	99.13	16.59

The MSCI Asia-Pacific Index of regional shares dropped 5.6 per cent after the Standard & Poor’s 500 Index fell 3.1 per cent yesterday. Japan’s Nikkei 225 Stock Average slumped 6.8 per cent.

Indonesia’s rupiah fell to near a three-year low as the government said exports would increase less than 11.9 per cent in 2009, after estimated growth of 12.5 per cent this year.

“Risk aversion is still the dominant theme,’’ said Gundy Cahyadi, an economist at IDEAglobal in Singapore. “People are cautious. Any time the rupiah strengthens just below 9,800, people start buying back the US dollar.’’

The rupiah weakened 1.2 per cent to 9,970 a dollar in Jakarta. It earlier slumped to 10,126, just shy of the 10,130 reached October 10 that was the lowest since November 2005.

The Singapore dollar fell to a one-year low on concern that a worldwide economic slowdown will prolong the island state’s recession. The currency declined for a second day as the benchmark Straits Times Index slid 5.5 per cent on Wednesday, bringing its loss for the year to 48 per cent.

“There’s a lot of fear about the slowdown that is coming this year and next,’’ said Ho Woei Chen, an economist at United Overseas Bank, Singapore’s second-largest bank.