Asian Currencies Post Weekly Decline as Investors Sell Equities

By Aaron Pan and Bob Chen

Sept. 13 (Bloomberg) -- Asian currencies posted a weekly decline, led by Taiwan's dollar and Indonesia's rupiah, as overseas investors pulled funds out of the region's stocks.

Six of the 10 most-traded currencies in Asia outside of Japan fell this week as funds abroad sold more shares than they bought in Taiwan, the Philippines and Thailand. The MSCI Asia- Pacific Index of shares declined for a second week. Investors pared holdings of riskier assets as shares in Lehman Brothers Holdings Inc. slid on concern that the securities firm will fail to find buyers and raise capital.

``There's a lot of uncertainty weighing on the regional currencies right now,'' said David Cohen, director of Asian forecasting at Action Economics in Singapore. ``Volatility will likely continue for the near term. The equity markets everywhere are getting clobbered, so investors are shifting away from emerging markets.''

Taiwan's currency fell 0.5 percent this week to NT$32.041 as of the 4 p.m. close in Taipei, according to Taipei Forex Inc. The currency declined for an eighth week, the longest losing streak since October 2005. Indonesia's rupiah fell 0.6 percent this week to 9,435.

The Taiwan dollar traded near a seven-month low on speculation the Central Bank of the Republic of China (Taiwan) will cut borrowing costs. The central bank may lower interest rates at its next policy meeting on Sept. 25 to help revive the economy, the Economic Daily News reported yesterday, without identifying its sources.

Asian currencies also weakened as the dollar rose to the strongest in a year against the euro on evidence the economic slump that began in the U.S. has spread to the rest of the world.

Net Sellers

Overseas investors were net sellers of Taiwan's stocks for nine of the last 11 trading days, selling NT$82.8 billion ($2.58 billion) more than they bought during that period as the Taiex index declined 11.7 percent.

The Taiwan dollar is ``relatively stable,'' the central bank said on Sept. 11 for the fifth time since Aug. 8.

The Philippine peso declined for a seventh week against the U.S. dollar, its longest losing streak since June.

The peso dropped to the lowest level in a year as foreign funds sold Philippine shares every day this month. Fund managers sold $397.2 million more Philippine bonds and stocks than they bought for the first seven months of the year, compared with $3.6 billion in net purchases in the same period a year earlier, data from the central bank showed.

`Reducing Exposures'

``The peso's decline is driven by investors reducing their exposures in emerging markets including the Philippines,'' said Antonio Espedido, treasurer at China Banking Corp. in Manila.

The local currency fell 0.1 percent in the week to 46.895 per dollar, according to Tullett Prebon Plc. The peso traded near the lowest level since Sept. 12, 2007.

The Thai baht had its eighth weekly decline on concerns that the political impasse will drag on, deterring overseas investors.

The currency dropped to its lowest level in more than a year after lawmakers postponed a vote yesterday to select a new prime minister after lawmakers boycotted the session to prevent the re-election of Samak Sundaravej, who was ordered to step down this week for hosting a television cooking show.

Some members of Samak's People Power Party, which heads the ruling coalition, and its partners have said they want a less controversial figure to help end the dispute.

Passed a Point

``The political situation has passed a point of easy resolution,'' said Richard Yetsenga, a currency strategist at HSBC Holdings Plc in Hong Kong. ``Dollar-baht will continue to grind higher.''

The baht slipped 0.2 percent this week to 34.67, according to data compiled by Bloomberg. It dropped to 34.86 to the dollar yesterday, its lowest level since Aug. 23, 2007, when it traded at 35.79. The baht will drop to 36 by year-end, Yetsenga said.

South Korea's won rose for the first week in seven as stock gains and intervention signs outweighed speculation that overseas investors will dump the nation's assets.

Kospi Jumps

Traders are ``on the lookout'' for officials to act in the currency market, said Park June Geun, a dealer with BNP Paribas SA in Seoul, after the delay of a $1 billion government-debt sale added to concerns the nation is heading for a repeat of the 1997 financial crisis. The Kospi index jumped 2.4 percent, completing its first weekly gain in a month, after U.S. stocks advanced a day earlier on a decline in oil prices.

``A bullish stock market is fueling some optimism foreign investors could stop offloading their holdings,'' said Chun Chong Woo, an economist with Standard Chartered First Bank Korea Ltd. in Seoul. ``Falling oil prices and growing chances for a U.S. rate cut may overshadow news of delay in bond issuance.''

The won rose 0.8 percent this week to 1,109.05 per dollar, according to Seoul Money Brokerage Services Ltd.

Elsewhere in the week, the Malaysian ringgit rose 0.5 percent to 3.4435 and the Singapore dollar gained 0.2 percent to S$1.4356. Vietnam's dong gained 0.1 percent to 16,580.

To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net.