Asian Currencies Fall, Led by Korean Won, as Funds Sell Shares

By Aaron Pan and Judy Chen

Aug. 26 (Bloomberg) -- Asian currencies declined, led by South Korea's won, on speculation global fund managers are taking their money out of the region after selling local stocks.

The won fell to the lowest level since November 2004 against the dollar and extended its decline to 7.3 percent since Finance Minister Kang Man Soo told lawmakers on July 28 that the country faces difficult times. Nine of the 10 most-traded Asian currencies outside Japan declined today, according to data compiled by Bloomberg.

``The trend will continue due to offshore players' heavy buying of the dollar,'' said Sam Hong, a currency trader in Seoul at Shinhan Bank, a unit of South Korea's second-biggest financial group. ``The government's selling of the dollar this month isn't enough to support the currency.''

The won weakened 1 percent to 1,089.4 versus the dollar as of the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. The local currency has dropped every day this month except two.

Fund managers outside Korea sold more local shares than they bought for a sixth straight day as the benchmark Kospi stock index extended its slump this year to 21 percent.

Malaysia's ringgit fell for a second day on speculation losses linked to the U.S. mortgage market will aggravate a global economic slowdown, curbing the nation's exports.

The currency weakened to a nine-month low after Bank Negara Malaysia said exports will moderate as the economy suffers from the effects of a global credit crunch. Opposition leader Anwar Ibrahim, a former deputy prime minister, may return to parliament by winning a by-election today.

`Slowdown Concerns'

``The focus has shifted to slowdown concerns and the bias is for a weaker ringgit,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``Investors are also keeping an eye on the risks associated with the by-election.''

The ringgit fell 0.5 percent to 3.3910 per dollar, according to data compiled by Bloomberg. The currency earlier reached 3.3930, the lowest level since Nov. 22.

Malaysia's central bank yesterday kept its overnight policy rate at 3.5 percent, unchanged in 19 straight meetings since April 2006, citing risks of a slowdown. The announcement came after local financial markets closed.

Growth in Southeast Asia's third-largest economy slowed to 6 percent in the second quarter, versus 7.1 percent in the previous three months, according to the median forecast of 11 economists in a Bloomberg News survey. The central bank will release the report on Aug. 29.

Peso Declines

The Philippine peso fell to the lowest in more than 11 months on concern a deepening global economic slump will spur investors to reduce holdings of emerging-market assets.

The local currency dropped for a second day as regional and U.S. stocks declined on speculation American International Group Inc. will post a loss. Philippine import growth accelerated for the first time in five months in June, the National Statistics Office said today in Manila.

``Investors are pulling out of their risky investments,'' said Vishnu Varathan, regional economist at Forecast Singapore Pte. The imports figure ``adds to sentiment that the peso should weaken.''

The Philippine currency dropped 0.8 percent to 45.995 per dollar, according to Tullett Prebon Plc. Local financial markets were closed yesterday for a public holiday. The currency touched 46 against the dollar, the weakest since September 2007.

Taiwan Dollar

The Taiwan dollar weakened to the lowest in six months after export orders increased by the least in five years as cooling sales in China added to the slowdown in global demand.

The currency fell for a second day after the Ministry of Economic Affairs said yesterday that orders, an indicator of actual shipments over the next one to three months, rose 5.52 percent from a year ago. That was the smallest increase since May 2003. Orders from China gained 1.73 percent last month, the least since February 2005.

``The export orders are very much in line with the slowdown in external demand,'' said Irene Cheung, a strategist at ABN Amro Bank NV in Singapore. ``It'll continue to play out and we'll see further depreciation in the Taiwan dollar.''

The currency fell 0.2 percent to NT$31.489.

Elsewhere, Singapore's dollar lost 0.6 percent to S$1.4253 against the U.S. currency, Indonesia's rupiah declined 0.2 percent to 9,176, Thailand's baht dropped 0.3 percent to 34.21 and Vietnam's dong was unchanged at 16,630.

To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.