Asian Currencies: Taiwan Dollar Leads Losses on Global Slowdown

By Anil Varma and Bob Chen

Sept. 2 (Bloomberg) -- Asian currencies fell, led by Taiwan's dollar and the Philippine peso, on concern a deepening global economic slump will damp demand for the region's exports.

Taiwan's currency fell to a six-month low after Bank of Japan Governor Masaaki Shirakawa said yesterday the world's second-biggest economy is likely to remain ``sluggish'' and the U.K. reported the fewest mortgage approvals since at least 1999. The U.S. dollar advanced against all of the 10 most-traded Asian currencies outside Japan as crude oil fell to a four-month low.

``Asian currencies will look weaker,'' said Daniel Hui, a currency strategist at HSBC Holdings Plc in Hong Kong. ``A weak U.K. housing number is bearish for the pound, so it provides support for the U.S. dollar. As oil prices drop, that should also be positive for the dollar. These events reinforce the overall economic slowdown trend.''

Taiwan's dollar fell as much as 0.6 percent to NT$31.78 against its U.S. counterpart, the lowest level since Feb. 13, according to Taipei Forex Inc. The currency traded at NT$31.751 as of 1:29 p.m. local time, from NT$31.593 yesterday.

Taiwan's exports rose 8 percent in July from a year earlier, the smallest gain since May 2007, and export orders grew at the slowest pace in five years, the government said last month. Overseas sales account for about half of the island's economy.

The Philippine peso fell to an 11-month low against the dollar on speculation overseas investors are shifting their funds to the U.S. and away from emerging markets.

`Gaining Momentum'

The peso dropped for a third day as crude oil extended its decline to 3.8 percent this week as Hurricane Gustav weakened before striking the U.S. Gulf Coast, easing concern it would cause major damage to oil rigs and refineries.

``The dollar is gaining momentum against regional currencies, including the peso, because the biggest beneficiary of lower oil prices is the dollar,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. in Manila. ``Investors are shifting back to U.S. assets as commodities decline.''

The peso fell 0.5 percent to 46.495 versus the dollar, according to Tullett Prebon Plc. The currency touched 46.497, the weakest since Sept. 18, 2007.

Thailand's baht fell to the lowest in more than a year after Prime Minister Samak Sundaravej declared a state of emergency, raising concern parliament will be dissolved.

The currency extended last month's 2.1 percent decline after clashes in Bangkok between thousands of pro- and anti- government supporters left 34 injured. The People's Alliance for Democracy, a group seeking Samak's resignation, has occupied Government House, where the prime minister's office is located, since Aug. 26.

Short the Baht

``We are short the Thai baht,'' said Thomas Harr, a senior currency strategist at Standard Chartered Plc, referring to positions that profit from an asset's decline. ``Dissolution of the Thai parliament is the most likely scenario.''

The baht fell 0.4 percent to 34.46 per dollar, according to data compiled by Bloomberg. The currency may fall to 35 by the end of September, Singapore-based Harr said, adding that the central bank will act to limit declines today.

Bank of Thailand Deputy Governor Atchana Waiquamdee said political instability has overtaken inflation as the biggest threat to the economy. The central bank aims to ``contain volatility in the baht,'' she said in an Aug. 29 interview.

Overseas investors sold $3.1 billion more Thai stocks than they bought this year, according to data compiled by Bloomberg. The SET Index of stocks has fallen 23 percent this year.

Indonesian Rupiah

Indonesia's rupiah declined for a third day on concern a slowdown in the global economy will hurt exports.

The rupiah dropped to its lowest in two weeks after the government yesterday reported overseas sales grew 25.5 percent in July, slowing from 34.9 percent in June. Bank Indonesia will temper losses in the rupiah by selling dollars at 9,190 to 9,195, said Joanna Tan, an economist and foreign-exchange strategist at Forecast Singapore Pte.

``There are some underlying economic concerns,'' Singapore- based Tan said. ``The rupiah is pressured. Bank Indonesia will likely support the currency.''

The rupiah fell 0.3 percent to 9,194 per dollar, according to data compiled by Bloomberg.

Elsewhere, the Indian rupee declined 0.1 percent to 44.205 against the U.S. currency and the Singapore dollar weakened 0.3 percent to S$1.4288. Vietnam's dong fell 0.1 percent to 16,560.

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net.