Asian Currencies: Peso, Won Lead Declines on Oil, Stock Sales

By David Yong and Karl Lester M. Yap

Aug. 4 (Bloomberg) -- The Philippine peso fell, pacing declines among regional currencies, on speculation fund outflows will undermine the central bank's balance of payments target.

The peso dropped for a third day after the Philippine Star newspaper said the nation's balance of payments surplus may be not meet the central bank's estimate of $2.5 billion, citing people at the Monetary Board it didn't identify. South Korea's won declined on concern higher oil prices will prompt refiners to buy more dollars.

``A decreasing BOP surplus will add pressure to the currency,'' said Antonio Espedido, treasurer at China Banking Corp. in Manila. ``The only thing that could mitigate it is if remittances will hold up,'' he said, referring to the funds sent home by Filipinos working overseas.

The peso dropped 0.6 percent to 44.470 per dollar as of 12:33 p.m. in Manila, according to Tullett Prebon Plc. It earlier touched 44.478, the lowest since July 24. The won fell 0.1 percent to 1,015.80, adding to its 8 percent loss this year, according to Seoul Money Brokerage Services Ltd.

The peso slumped as foreign investors sold more local stocks than they bought everyday in July except four. Most Asian currencies weakened today, including the Taiwan dollar and the Indonesian rupiah, as crude oil costs increased.

Korea's won traded near the weakest in a month on speculation refiners are buying more dollars to pay for imports and global funds sold local stocks. A Bank of Korea report today showed the nation's foreign-exchange reserves declined for a fourth month in July.

Crude Costs

``There's a steady demand for the dollar as usual in spite of caution against intervention from the authorities,'' said Sam Hong, a currency trader at Shinhan Bank in Seoul. ``The drop in reserves shows their diminishing capability to intervene.''

The Philippines, South Korea and Taiwan import almost all of the oil they consume. Crude oil for September delivery rose for a second day to $126. 31 a barrel as a storm threatened U.S. output in the Gulf of Mexico.

China's yuan slid for a fourth day, the longest losing stretch since July 2007, on concern the government will tighten capital controls to help temper currency gains that are hurting exports. Speculative capital betting on faster gains in the yuan has driven a 6.7 percent advance in the currency this year, almost equal the pace in all of 2007.

`Hot Money' Crackdown

``The crackdown on hot money will definitely affect the yuan's exchange rate,'' said Lu Zhengwei, an economist at Industrial Bank Co. in Shanghai. ``Since the government started stricter rules to control fake foreign-trade transactions, there has been less exporters' demand for the yuan.''

China is revising its currency management regulation to better control capital flows, the government said in a statement on its Web site on Aug. 1.

The yuan traded at 6.8465 per dollar in Shanghai versus 6.8425 on Aug. 1, according to the China Foreign Exchange Trade System. The currency's 0.3 percent gain in July was its smallest monthly advance since March 2007.

Elsewhere, Malaysia's ringgit declined 0.1 percent to 3.2660, Taiwan's dollar dropped 0.2 percent to NT$30.7 and the Singapore dollar was little changed at S$1.3695. Vietnam's dong traded at 16,747.5 versus 16,750 on Aug. 1 while Indonesia's rupiah slipped 0.1 percent to 9,102.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.