Asian currencies have worst week in four months on slowdown risk

Asian currencies had their worst week in four months, led by a slide in Malaysia’s ringgit, as data suggesting the US recovery is faltering dimmed the outlook for exports and curbed demand for riskier assets.

The Bloomberg-JPMorgan Asia Dollar Index, a gauge of the region’s 10 most-used currencies excluding the yen, slumped 0.6 per cent, its biggest loss since the first week of 2011. The ringgit dropped 1.4 per cent to 3.0025 versus the greenback and the rupee slid 1.3 per cent to 44.795, based on data compiled by Bloomberg. South Korea’s won fell 1.1 per cent to 1,083.34 after the financial regulator said it would expand an investigation into banks’ trading of currency derivatives.

“People are increasingly more concerned about the global growth situation with the US data coming in soft,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “Asia is by and large a manufacturing and exporting hub, so it will be hurt as well. There’s some amount of risk reduction going on in the market.”
 

CURRENCY VS THE DOLLAR Weekly Asian currency movement
	Apr 29, 11	May 06, 11	% chg
Australian dollar	1.10	1.07	2.47
Japanese yen	81.19	80.63	0.69
Brazilian real	1.58	1.61	-2.51
Malaysian ringgit	2.96	3.01	-1.56
Rupee	44.22	44.80	-1.30
Singapore dollar	1.22	1.24	-1.22
Russian ruble	27.38	27.71	-1.18
Thai baht	29.88	30.21	-1.10
Korean won	1071.53	1083.34	-1.10
Indonesian rupiah	8563.00	8588.00	-0.29
Taiwan dollar	28.61	28.68	-0.23
Hong Kong dollar	7.77	7.77	-0.07
Chinese renminbi	6.49	6.49	-0.02
Compiled by BS Research Bureau Source: Bloomberg

Service industries in the US expanded at the slowest pace in eight months in April, while employment rose by the least in five months, data showed this week. A Purchasing Managers’ Index in China indicated manufacturing is cooling in Asia’s biggest economy and slides in commodities prices damped speculation yuan appreciation will be favored to tame inflation. China is the world’s No 1 importer of copper, cotton and soybeans, as well as the second-biggest buyer of crude oil.

Commodities, Stocks
The Standard & Poor’s GSCI Index of commodities tumbled 11 per cent, its biggest loss since December 2008, and crude oil plunged 15 per cent in New York to $97.18 a barrel. The MSCI Asia Pacific Index of shares declined 1.4 percent. Central banks in the Philippines and Malaysia raised interest rates yesterday, joining India and Vietnam this week in prioritizing the fight against inflation.

“External factors including the drop in commodity prices and stock markets are damping investor demand for riskier assets, prompting the won to fall,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “The announcement of further inspections on currency derivatives trading and concerns about possible intervention weighed on the won throughout the week.”