Asian currencies end rally on poor US data

Updated: 2011-06-13 08:51

By Khalid Qayum (China Daily)

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SINGAPORE - Asian currencies halted a three-week rally as signs the world's biggest economy is slowing tempered demand for emerging-market assets and raised concern about the outlook for exports.

Federal Reserve (Fed) Chairman Ben Bernanke said at the end of last week the United States economic recovery was "frustratingly slow" and offered no hints on a new stimulus program. The Fed has pumped cash into the banking system and kept interest rates near zero, prompting investors to search for higher yields in developing markets. The Bloomberg-JPMorgan Asia Dollar Index dropped 0.4 percent last week as overseas investors were net sellers of $1.6 billion of equities in Thailand, South Korea and Taiwan.

"On balance, the global economic data has been on the weaker side as reflected in manufacturing indicators," said Choong Yin Pheng, manager for economic and fixed-income research at Hong Leong Bank Bhd in Kuala Lumpur. "The risk has tilted to growth and Asian currencies will be affected in a risk-averse environment."

The South Korean won fell 0.2 percent this week to close at 1,082.65 a dollar on Friday in Seoul, according to data compiled by Bloomberg. Taiwan's dollar dropped 0.3 percent to NT$28.835, Thailand's baht lost 0.2 percent to 30.40 and Malaysia's ringgit weakened 0.3 percent to 3.0210. The Philippine peso declined 0.2 percent to 43.302 a dollar.

The MSCI Asia-Pacific Index of regional stocks posted a sixth weekly loss after a June 3 government report showed US employers hired the least workers in May in eight months. China's customs bureau reported on Friday a $13.1 billion trade surplus for May, compared with the median forecast in a Bloomberg survey of $19.3 billion, as export growth slowed to 19 percent from 30 percent.

Global funds sold $672 million more Thai equities than they bought this month, exchange data showed. Risk aversion and concerns about the nation's political scene have triggered fund outflows, Bank of Thailand Governor Prasarn Trairatvorakul said on June 9.

"Amid risk aversion caused by concern about the US recovery and uncertainty surrounding the Thai polls, foreign investors have been selling local stocks," said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp in Bangkok. "That is putting downward pressure on the baht."

South Korea's central bank Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3.25 percent from 3 percent on Friday, the third increase this year. Eight of 17 economists surveyed by Bloomberg News predicted the decision, with the rest having forecast no change.

Bloomberg News


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