Asian Currencies Fall, Led by Won, on U.S. Bank Rescue Progress

By Anil Varma and Aaron Pan

Sept. 29 (Bloomberg) -- Asian currencies fell, with South Korea's won dropping to the lowest level since 2003, after U.S. lawmakers agreed on a $700 billion rescue package for credit markets, stoking demand for the dollar.

The won is the worst performer this year of the 16 most- actively traded currencies, having tumbled more than 20 percent as the global economic slowdown and credit crunch prompted investors to sell emerging-market assets. The currency also fell on reports the U.K.'s Bradford & Bingley Plc will be taken over or nationalized, spurring investors to seek the safest assets.

``The dollar is being buoyed on the back of the bailout plan and that's undermining the won,'' said Emmanuel Ng, an economist at Oversea-Chinese Banking Corp. in Singapore. ``Risk aversion remains at elevated levels and market sentiment will remain cautious.''

The won slid 2.9 percent to 1,195.75 versus the dollar as of 2 p.m. local time, according to Seoul Money Brokerage Services Ltd. The currency touched 1,198.55, the weakest level since December 2003. Indonesia's rupiah dropped 0.8 percent to 9,463 and the Philippine peso declined 0.4 percent to 46.912.

Congress may vote on the rescue plan today, which would let the U.S. Treasury begin purchasing distressed debt securities from financial companies.

The won's decline is overdone and the government is ready to intervene to stem its losses, Choi Jong Ku, director general of the ministry's international finance bureau, said in a statement in Gwacheon, near Seoul.

Deepening Crisis

Indonesia's rupiah declined for a fifth day on concern the deepening credit crisis is deterring investors. India's rupee slumped, heading for its worst monthly loss since the Asian financial crisis in 1997, as global investors sold stocks. Overseas funds have already cut holdings equivalent to more than half of their net purchases of local shares last year.

``There won't be any respite for the rupee in the near term because of uncertainty of the financial crisis being sorted anytime soon,'' said Parthasarathi Mukherjee, president of treasury at Axis Bank Ltd. ``We may see an accelerated fall in the rupee.''

The rupee declined 6.2 percent this month to 46.92 against the dollar in Mumbai, the biggest monthly drop since November 1997, according to data compiled by Bloomberg. It reached 46.9750 last week, the lowest since July 2006.

Selling Stocks

Overseas investors have sold $9.2 billion more Indian equities this year than they bought, according to data from the Securities & Exchange Board of India. They purchased a record $17.2 billion in stocks last year which helped the rupee complete its best annual gain in at least 34 years.

The Philippine peso fell on speculation the U.S. rescue plan for financial companies will help sustain growth in the world's biggest economy.

``The dollar is stronger as the U.S. bailout plan nears approval,'' said Rafael Algarra, treasurer at Security Bank Corp. in Manila. ``It is positive for the dollar, at least in the short-term, as it restores confidence in the U.S. economy.''

The peso touched 46.925, the lowest since Sept. 18, according to Tullett Prebon Plc.

Elsewhere, the Thai baht declined 0.3 percent to 34.03 against the U.S. currency and the Malaysian ringgit weakened 0.2 percent to 3.4410. Vietnam's dong was unchanged at 16,600.

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net; Aaron Pan in Hong Kong at Apan8@bloomberg.net.