Singapore/Beijing: Asian currencies fell on Thursday, led by the South Korean won and the Indonesian rupiah, on speculation that a slumping US labour market will erode demand for exports and spoil returns on the region’s assets.
The won, Asia’s worst performer of 2008, weakened as foreign investors sold more Korean shares than they bought for the first time in seven days. The rupiah fell, snapping a three-day gain, as global equities declined following a private report that showed US job losses increased in December. The ringgit slid to a three-week low before a report that will probably show slumping Malaysian manufacturing.
“Risk aversion is picking up again,” said Nizam Idris, a currency strategist in Singapore at UBS AG, the world’s second largest currency trader. “The market is concerned about the economy again. Under this sort of environment, Asian currencies will weaken.”
The won, which lost 26% last year, fell 3% to 1,333 per US dollar (Re0.04) on close, according to Seoul Money Brokerage Services Ltd. The rupiah dropped 1.5% to 10,960 (Re0.01), Malaysia’s ringgit declined 1% to 3.54 per US dollar (Rs14.25), and Taiwan’s dollar slid 0.4% to 33.12 (Rs1.51).
South Korea’s economy may shrink in the first half of 2009 amid a slowdown in exports, rising unemployment and frail consumption, President Lee Myung Bak had said last month. It probably contracted in the last quarter of 2008 for the first time in five years, the central bank said.
The won will slide to 1,425 per dollar this quarter, according to the median forecast of analysts surveyed by Bloomberg. The rupiah will drop to 12,500, a separate survey shows.
The yen advanced for a second day against the dollar after rockets fired from Lebanon struck northern Israel, pro-mpting investors to seek the perceived safety of Japanese assets. The Japanese currency rose to 91.67 per dollar (Re0.53) in London from 92.65 late on Wednesday in New York.
The MSCI Asia Pacific Index of regional stocks declined 3% after ADP Employer Services said US payrolls shrank by 693,000 jobs in December.
Satyam Computer Services Ltd, India’s fourth largest software services provider, slumped 78% on Wednesday after chairman B. Ramalinga Raju said he had falsified earnings over several years.
“Asia’s macroeconomic and currency outlook is a bit negative in the short term because we still expect bad US payrolls to continue,” said Hideki Hayashi, chief economist in Tokyo at Shinko Securities Co. Ltd. India’s stock scandal will hamper any recovery in overseas investor confidence.
David Yong in Singapore and Bob Chen in Hong Kong contributed to this story.