Asian Currencies Fall, Led by Korean Won, Rupiah on Stock Sales

By Aaron Pan and Kim Kyoungwha

Sept. 11 (Bloomberg) -- South Korea's won and Indonesia's rupiah led losses in Asian currencies on speculation purchases of dollars will increase as overseas investors add to sales of regional stocks.

All 10 of the most-traded currencies in Asia outside of Japan fell as funds abroad sold more shares than they bought in Korea, Taiwan, the Philippines and Thailand. The won remained lower after the Bank of Korea kept interest rates unchanged at an eight-year high of 5.25 percent. Asian currencies also declined as the dollar rose to the highest in almost a year against the euro.

``Capital is moving back to the U.S.,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. in Manila. ``Banks, funds and companies are selling their investments in Asia and the rest of the world to fund recapitalization of U.S. companies.''

The won declined 1.3 percent to 1,109.5 against the dollar as of the 3 p.m. close in Seoul, compared with 1,095.50 yesterday, according to Seoul Money Brokerage Services Ltd. The rupiah fell 0.8 percent to 9,428 per dollar, the lowest since Jan. 23, and dropped as much as 1 percent to 9,455, according to data compiled by Bloomberg.

Korea's won slumped 15 percent this year as global funds dumped Korean shares on concern that the country may be headed for a repeat of the 1997 financial crisis. Vice Finance Minister Bae Kook Hwan said officials will take action when the currency market is ``volatile.''

`Continued Intervention'

``Continued intervention will do more harm than good given the global trend of a stronger dollar,'' said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. ``Behind the won's weakness is a perception forming that the central bank will find it increasingly difficult to raise interest rates as growth slows.''

International investors have sold more Korean shares than they bought every day except five in the 29 trading days since Aug. 1, according to Korea Exchange data. Central banks intervene in the currency market by selling or buying foreign exchange.

The Indonesian central bank will stay in the market to curb rupiah volatility, Deputy Governor Hartadi A. Sarwono said yesterday.

Oversea investors sold more Indonesian stocks than they bought on five of the past eight trading days, helping sending the benchmark share index to a 17-month low.

`Panic in the Market'

``There's panic in the market because of losses on the stock exchange,'' said Lindawati Susanto, head of currency trading at Bank Resona Perdania Pt in Jakarta. ``The rupiah is trying to break 9,500.'' The central bank will limit losses in the rupiah, Susanto said.

The Philippine peso fell to the lowest in a year as Lehman Brothers Holdings Inc. reported a record loss and said it will sell a stake in its asset-management unit and spin off real- estate holdings.

The currency declined as much as 1.9 percent to 47.80 per dollar, according to Tullett Prebon Plc, the lowest since May 2007, and last traded at 47.088.

Taiwan's dollar fell to an almost seven-month low on speculation a global economic slowdown will crimp demand for the island's exports.

``When the market sees the major economies in the world slowing, there will be weakness in the Taiwan dollar,'' said Philip Wee, a currency strategist at DBS Bank Ltd. in Singapore.

The island's currency fell as much as 0.7 percent to NT$32.080 against the U.S. dollar, the weakest since Feb. 12, according to Taipei Forex Inc. It last traded at NT$32.04.

Overseas investors were net sellers of Taiwan stocks for eight of the last 10 trading days, during which time the Taiex index fell 8.8 percent.

Malaysian Ringgit

Malaysia's ringgit traded close to a one-year low on speculation falling commodity prices such as palm oil will erode export receipts and curb growth in Southeast Asia's third-largest economy.

A government report today showed industrial production grew at the slowest pace in 11 months in July. Industrial production rose 1.8 percent from a year earlier, according to the Statistics Department. That was below the median forecast in a Bloomberg News survey of 16 economists for a 2.1 percent gain. It expanded 2 percent in June, the slowest since August 2007.

``The weakness is tied to the outlook for slower growth and outflows of capital from the local markets,'' said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. ``The ringgit is not getting much support'' from the government or central bank, he said.

The ringgit was little changed at 3.4685 per dollar, according to data compiled by Bloomberg. The currency earlier reached 3.4743, the lowest since Sept. 19, 2007.

The ringgit's recent decline is not a problem for the country, state news agency Bernama reported yesterday, citing Deputy Finance Minister Ahmad Husni Hanadzlah.

Elsewhere, the Singapore dollar lost 0.6 percent to S$1.4437, Thailand's baht declined 0.5 percent to 34.75 and Vietnam's dong added 0.1 percent to 16,580.

To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.