Asian Currencies Post Weekly Decline on Global Growth Concern

By Aaron Pan and David Yong

Aug. 16 (Bloomberg) -- Asian currencies posted a weekly decline, led by the Philippine peso, after a contraction in Europe's economy added to concern a global slowdown will damp demand for emerging-market assets.

The peso had its worst week in a year as overseas investors sold more of the nation's stocks than they bought for the past 14 days. All the 10 most-traded Asian currencies fell this week as government reports showed Europe and Japan's economies both contracted in the second quarter and the Bank of England cut its U.K growth forecast, citing a ``chill in the economic air.''

``The peso will depreciate in the short term as risk aversion seems to have made a comeback in emerging markets with the selling in stocks,'' said Ricky Cebrero, a treasurer at East West Banking Corp. in Manila.

The peso slumped 2.2 percent this week to 45.310 per dollar in Manila yesterday, according to Tullett Prebon Plc. The decline is the most since the five days ended Aug. 17, 2007. The peso may reach 45.50 in ``coming sessions,'' Cebrero said.

Taiwan's dollar dropped for a fourth week on concern a slowing world economy will cut demand for the island's exports.

The currency has dropped every day in August except one as the government reported its first trade deficit since 2006. The Taiwan dollar's decline was caused by foreign fund outflows, the Commercial Times newspaper reported yesterday, citing an unidentified central bank official.

`Underperform'

``Taiwan will underperform relative to the rest of the region as the global slowdown unfolds,'' said Daniel Hui, a currency strategist at HSBC Holdings Plc in Hong Kong. ``The U.S. dollar is rebounding because the outlook for the rest of the world is basically being downgraded.''

The currency fell 0.8 percent this week to NT$31.330, after touching NT$31.405 yesterday, the weakest since Feb. 25. It has fallen 3.1 percent in the past month.

Taiwan's gross domestic product may expand 4.78 percent this year, the slowest since 2005, according to a statistics bureau forecast in May. Growth in exports, which account for about half of GDP, slowed to 8 percent in July from 21 percent the previous month, the government said Aug. 7.

Singapore's dollar posted its fourth weekly decline as the government lowered its export and growth forecasts, predicting a ``bumpy year'' ahead. The currency has lost 3.5 percent this month, making it the worst performer among the most-active Asian currencies.

`Weak Numbers'

``The Singapore dollar will remain soft in the coming weeks as we are expecting more weak numbers from the Euro zone, which will set the tone for Asia and Singapore,'' said Wai Ho Leong, a regional economist at Barclays Capital in Singapore.

The local currency fell 1.3 percent this week to S$1.4167 against the U.S. dollar, according to data compiled by Bloomberg. It lost 0.5 percent yesterday.

Malaysia's ringgit had its biggest weekly slump in nine months on speculation growth in its largest overseas markets in Singapore, Japan and Europe will keep faltering.

``I can't say that the outlook is particularly positive for the ringgit,'' said Dwyfor Evans, a Hong Kong-based strategist at State Street Global Markets. ``Ominously, regional export data is deteriorating quickly.''

The ringgit fell 1.4 percent this week to 3.3490 per dollar, according to data compiled by Bloomberg. The drop is the biggest since the five days ended Nov. 16.

Elsewhere, the Indonesian rupiah lost 0.2 percent this week to 9,190 per dollar, the Thai baht declined 0.4 percent to 33.84 and Vietnam's dong weakened 0.3 percent to 16,600.

To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.