Asian Currencies Fall, Led by Rupiah, Ringgit; Korean Won Gains

By Aaron Pan and David Yong

Sept. 10 (Bloomberg) -- Malaysia's ringgit and Indonesia's rupiah led declines among Asian currencies on speculation investors will avoid emerging markets on concern that credit losses will keep widening. South Korea's won gained.

The ringgit dropped to the lowest in almost a year and Taiwan's dollar traded near the weakest in seven months as funds abroad added to September share sales. Lehman Brothers Holdings Inc. is due to report third-quarter results today and ``key strategic initiatives,'' bringing forward the announcement after its stock fell a record 45 percent in New York.

Global financial firms have reported more than $500 billion in credit-market losses and writedowns since the start of last year related to the subprime mortgage collapse. Slowing economic growth around the world threatens to cut demand for Asian exports while Malaysia and Thailand face a leadership struggle.

``The ringgit trend is mostly affected by global sentiment and the dollar's strength,'' said Gundy Cahyadi, an economist at Ideaglobal in Singapore. ``We would also caution that the political situation in Malaysia is looking quite bad and could spring some nasty surprises next week.''

Malaysia's currency dropped 0.3 percent to 3.4585 per dollar as of 4:55 p.m. in Kuala Lumpur and Indonesia's rupiah lost 0.7 percent to 9,365, according to data compiled by Bloomberg. South Korea's won advanced 0.5 percent, following yesterday's biggest drop in a week. The ringgit may reach 3.47 within two weeks, Cahyadi said.

Stocks Dumped

Investors overseas sold more shares than they bought so far in September in Indonesia, the Philippines, Korea, Taiwan and Thailand, Bloomberg data show. Malaysia doesn't reveal asset purchases and sales. The MSCI Asia-Pacific Index of regional stocks declined for a second day, taking the loss this month to 5.9 percent.

Standard & Poor's and Fitch Ratings put Lehman's credit rating on watch for a possible downgrade, citing pressures that limited the ability of the fourth-largest U.S. securities firm to raise new capital. Lehman has been negotiating with potential investors and selling devalued mortgage assets that contributed to a $2.8 billion loss last quarter.

Malaysia's ringgit has lost 1.9 percent in September, adding to a 4.1 percent decline last month, the biggest since a dollar link was scrapped in July 2005.

Opposition Leader Anwar Ibrahim, who faces an illicit-sex trial this month, has said he would topple the government of Prime Minister Abdullah Ahmad Badawi by Sept. 16 via defections from ruling lawmakers.

Rupiah Snaps Gain

Indonesia's rupiah snapped a two-day gain on concern that credit-market losses haven't abated and as foreign investors sold $132 million more Indonesian stocks than they bought this month through yesterday, according to stock exchange data.

``Money is not coming into Asia,'' said Irene Cheung, a strategist at ABN Amro Bank NV in Singapore. ``We think the market is still complacent and it's a good opportunity to position for a higher dollar-rupiah.''

Korea's won rose after President Lee Myung Bak dismissed speculation the country is on the verge of an economic crisis.

``Our fundamentals are not as weak as a decade ago,'' Lee said in a discussion with a group of South Korean people late yesterday in Seoul in a televised forum. ``The weakness in the won is largely because of overall strength in the dollar around the world.''

The currency has slumped 15 percent this year, Asia's worst performer, as a slowing economy and inflation prompted global funds to pull money out.

Thailand Politics

Thailand's baht fell as investors doubted whether a court order removing Prime Minister Samak Sundaravej will bring an end to a political power struggle.

Samak and his cabinet were ordered to resign yesterday after the court said he violated the constitution by hosting a television cooking show. Legislators will convene Sept. 12 to elect a new premier, parliament speaker Chai Chidchob said on television today. Samak's coalition, which holds a majority in parliament, has said prior to the court ruling, that they will re-elect him.

``Any kind of political developments would not change the complexity of baht trading unless it is massive good news which is a quick end to the mess,'' said Nizam Idris, a currency strategist at UBS AG in Singapore. ``If we have an election, we could well end up with the same party in power.''

The baht fell 0.3 percent to 34.62 versus the dollar from 34.53 late yesterday, according to data compiled by Bloomberg. The currency yesterday slid to its lowest level since August 2007 before erasing all losses on the court's decision late evening.

Taiwan Markets

Taiwan's dollar traded near a seven-month low as further signs of a global economic slowdown prompted investors to shun riskier assets.

The island's currency was little changed after a report showed Japan's current-account surplus narrowed for a fifth month in July. Taiwan reported a trade deficit in August after imports climbed the most since February 2006.

``The currency is falling because Taiwan's market is one of the most liquid in Asia,'' said Daniel Soh, an economist at Forecast Pte in Singapore. ``The slowdown was first in the U.S. but now the bad news is spreading to Europe and Japan. Because of the re-pricing of risk in Asian assets, funds are flowing out.''

The island's currency fell as much as 0.1 percent to NT$31.91 against the U.S. dollar, according to Taipei Forex Inc. It closed little changed at NT$31.863.

Elsewhere, the Singapore dollar dropped 0.3 percent to S$1.4347 and the Philippine peso declined 0.3 percent to 46.915. Vietnam's dong was unchanged at 16,590.

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