Vietnam - Asian Currencies Fall, Led by Peso, as S&P Warns Europe on Debt

by lexie Tue Dec 06, 2011 3:17 pm

December 6, 2011

Asian Currencies Fall, Led by Peso, as S&P Warns Europe on Debt

n currencies dropped, led by the Philippine peso and Thai baht, after Standard & Poor’s warned that the credit ratings of 15 euro-area nations may be cut, adding to concern global economic growth will slow.

The MSCI Asia-Pacific Index (MXAP) of shares snapped a six-day rally after S&P put countries including Germany and France on review for possible downgrade, saying a decision may be made following a summit of European Union leaders on Dec. 9. German Chancellor Angela Merkel and French President Nicolas Sarkozy are pushing for a rewrite of the EU’s governing rules to tighten economic cooperation.

“The comments from S&P are making people risk-averse and boosting dollar demand,” said Disawat Tiaowvanich, a foreign- exchange trader at Bangkok Bank Pcl. “The main driver of the market is developments in Europe.”

The peso declined 0.4 percent to 43.46 per dollar as of as of 16:59 p.m. in Manila, according to Tullett Prebon Plc. The baht dropped 0.3 percent from Dec. 2 to 30.87 per dollar as it resumed trading after a public holiday yesterday, while Indonesia’s rupiah fell 0.2 percent to 9,070. Malaysia’s ringgit weakened 0.1 percent to 3.1350.

South Korea’s economy may slow due to signs of global weakness and a decline in international trade, the nation’s Finance Minister Bahk Jae Wan said at a ministerial meeting in Seoul today. Bank of Thailand Director Singhachai Boonyayotin said Dec. 2 the baht’s strength may prove short-lived because of uncertainties in the global economy.
‘Increasingly Concerned’

China’s yuan tested the weaker end of its permitted trading range for a fifth day on concern economic growth in Asia’s largest economy is faltering. The People’s Bank of China set its daily reference rate little changed at 6.3334 per dollar, almost 0.5 percent stronger than the currency’s close yesterday.

“The market is increasingly concerned about the state of China’s property and export sectors as the euro-zone debt crisis deepens,” said Steve Wang, the Hong Kong-based head of fixed- income research at Bank of China International, a unit of China’s third-biggest lender by market value.

The yuan was little changed at 6.3642 per dollar at the close in Shanghai, after dropping 0.02 percent earlier. The currency is allowed to trade up to 0.5 percent either side of the fixing. Twelve-month non-deliverable forwards fell 0.12 percent to 6.3870 per dollar, a 0.3 percent discount to the onshore spot rate.

Taiwan’s dollar dropped for a third day after the central bank said yesterday foreign-exchange reserves fell to the lowest level in 10 months. A finance ministry report on Dec. 8 will show export growth slowed to 8.6 percent in November from a year earlier, compared with 11.7 percent the previous month, according to the median estimate of economists surveyed by Bloomberg. International reserves fell $5 billion last month to $388 billion.
‘Outward Remittances’

“Taiwan’s foreign-exchange reserves dropped, so that means outward remittances from Taiwan are bigger,” said Tarsicio Tong, a trader at Union Bank of Taiwan in Taipei. “Exporters who want to sell U.S. dollars will want a higher price.”

Taiwan’s dollar declined 0.1 percent to NT$30.225 against its U.S. counterpart, according to Taipei Forex Inc.

The won declined 0.1 percent to 1,131.35 per dollar. South Korea’s economy expanded 0.8 percent in the three months through September from the second quarter, compared with an October estimate for a 0.7 percent gain, the Bank of Korea said in Seoul today.

Philippine inflation slowed to 4.8 percent in November after a 5.2 percent gain in October, government data showed today, prompting the central bank to signal it has scope to lower interest rates.

Elsewhere, Singapore’s dollar weakened 0.3 percent to S$1.2854 against its U.S. counterpart and Vietnam’s dong was little changed at 21,011. (Bloomberg)

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