Asian Currencies: Ringgit Snaps Two-Day Loss; Korean Won Falls

By Lilian Karunungan and David Yong

Aug. 18 (Bloomberg) -- Malaysia's ringgit rose by the most in almost six weeks as charts signaled the currency's slump in the past four weeks was excessive. South Korea's won dropped as a report showed growth in department store sales slowed.

The ringgit also gained from near this year's low as the dollar weakened against the Japanese yen and euro. U.S. government reports this week may show housing starts declined and producer prices eased in July, adding to speculation the Federal Reserve will delay increasing interest rates until 2009.

``The ringgit has been sold down too aggressively,'' said Wan Murezani Mohamad, an analyst at Malaysian Rating Corp. in Kuala Lumpur. ``The U.S. credit and housing markets are still in the doldrums so there's no room for the Fed to be hawkish in the coming months.''

The ringgit climbed 0.5 percent to 3.3325 per dollar as of 4:13 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency fell 1.4 percent last week, the most since the five days ended Nov. 16. Korea's won declined 0.7 percent to 1,046.80.

The dollar-ringgit's 14-day relative strength index, a comparison of the magnitude of gains and losses, reached more than 70 in the past seven trading days, Bloomberg data showed. A level below 30 or above 70 signals a reversal may occur.

Singapore's Economy

Traders raised bets from a week ago that the Fed will hold its target rate for overnight loans between banks at 2 percent in the remaining three meetings this year, according to interest- rate futures contracts. The odds of a quarter-percentage point increase in borrowing costs in January were 45 percent.

The Singapore dollar rose after four weeks of losses as charts indicated the local currency was set to gain.

The currency's rise is ``probably more of a technical thing than anything,'' said Emmanuel Ng, an economist at Oversea- Chinese Banking Corp. in Singapore. ``The credit concern in the U.S. is not over by any means.''

The Singapore dollar rose 0.3 percent to S$1.4126, according to data compiled by Bloomberg.

The 14-day relative strength indicator for the Singapore dollar reached 76 today. In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.

Singapore's dollar had declined on signs the U.S. economic turmoil was spreading to Europe and Japan. Economic difficulties will continue at least until next year amid accelerating inflation and the global slowdown, Singapore Prime Minister Lee Hsien Loong said in his National Day rally speech yesterday.

Won, Retail Sales

South Korea's won fell to a six-week low after retail sales grew at the slowest pace in five months.

Korea's currency weakened for a seventh day as an index that tracks the dollar against six major currencies climbed for a fifth week through Aug. 15, making it harder for the central bank to intervene to halt won declines. A government report today showed sales at the nation's three biggest department stores for July increased 5.9 percent, half the pace in June.

``The global trend of a stronger dollar is behind the won's weakness,'' said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul. ``Economy wise, the recent data aren't hopeful enough to keep traders buoyant about the currency.''

India's rupee fell for a fifth day, the longest losing streak in more than eight months, on speculation refiners stepped up purchases of crude oil.

Companies including Indian Oil Corp., the nation's biggest refiner, may have purchased the dollar to buy more crude after the oil price on Aug. 15 touched the lowest in more than three months, according to Sudarshan Bhatt, chief currency trader at Corporation Bank. India's markets were closed that day for a holiday.

Oil Demand

``Crude oil is still not at levels where Indian refiners can breathe easy and hence dollar demand is persistent,'' Mumbai- based Bhatt said. ``Pressure on the rupee may increase the pace of its decline in the near term.''

The rupee weakened 0.5 percent to 43.2650 in Mumbai, from 43.055 on Aug. 14, according to data compiled by Bloomberg. It earlier touched 43.33, the weakest since July 8.

The currency may decline to 44 within a month, Bhatt predicted.

Elsewhere, Taiwan's dollar rose 0.1 percent to NT$31.307. Thailand's baht was little changed at 33.84 against the dollar. The Vietnamese dong fell 0.5 percent to 16,685. Markets were closed in Indonesia and the Philippines for public holidays.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net;