Asian Currencies Drop, Led by Rupiah, Won as Stocks Dumped

By Judy Chen and Lilian Karunungan

Oct. 28 (Bloomberg) -- Asian currencies fell, led by Indonesia's rupiah and South Korea's won, as global fund managers dumped the region's equities on concern a global financial crisis will hurt the region's economic expansion.

The rupiah touched the lowest level in seven years as President Susilo Bambang Yudhoyono said today the government will take ``quick'' action to support the rupiah. The won slid for a sixth day, extending its loss this year to 37 percent.

``This is still sentiment-driven trade in Asia,'' said Nizam Idris, a currency strategist in Singapore at UBS AG, Switzerland's biggest bank. ``At key levels, the central bank will try to slow down the weakness of the rupiah.''

The rupiah dropped 0.5 percent to 11,000 versus the dollar as of 2:35 p.m. in Jakarta, according to data compiled by Bloomberg. It touched 11,900, the weakest level since April 2001. The won fell as much as 3.5 percent to 1,467.80 against the dollar, the lowest since March 1998, before closing at 1,485.2, according to Seoul Money Brokerage Services Ltd.

Indonesia's currency has fallen 12.8 percent in October as overseas investors sold $145 million more of the nation's stocks than they bought.

South Korea's consumer confidence index dropped to 88 in October from 96 in September, the Bank of Korea said in Seoul today. That's close to the eight-year low of 84 reached in July. A reading below 100 indicates pessimists outnumber optimists.

``Dealers are watching the Kospi,'' said Jeff Kim, a currency dealer at Korea Exchange Bank in Seoul. ``Foreign investors' stock selling has absolutely added pressure onto the won.''

Yen Gains End

The yen fell for the first time in six days against the dollar and dropped the most in almost eight years versus the euro as a rebound in Asian stocks bolstered investor confidence in higher-yielding assets.

The yen also declined on speculation Japan's central bank will sell its currency for the first time since March 2004. Japanese Finance Minister Shoichi Nakagawa said yesterday the government is ready to act if needed to halt gains in the yen, which earlier traded near a 13-year high against the dollar and its strongest since May 2002 versus the euro.

``Equities are rebounding, giving some assurance to investors,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``There also are fears of possible intervention by Japan. All of this is causing selling of the yen.''

Japan's currency dropped to 94.52 per dollar, from 92.78 late yesterday. It reached 90.93 on Oct. 24, the highest since August 1995. The currency declined 1.7 percent to 117.93 per euro from 115.92 yesterday, when it touched 113.64, the strongest level in more than six years.

Thai Baht

Thailand's baht slumped to an 18-month low on concern that slowing economic growth and prolonged political unrest will keep overseas investors away.

The benchmark SET Index plunged more than 10 percent yesterday, triggering a halt in trading, as global funds dumped riskier assets. Anti-government protesters have occupied Government House for more than two months, demanding the administration's ouster. Thailand has had two premiers already this year following general elections in December.

``Economic concerns and prolonged political uncertainty have kept investors sidelined,'' said Nicholas Bibby, an economist at Barclays Bank Plc in Singapore.

The baht dropped as much as 0.4 percent to 34.97 per dollar, the weakest since April 2007, before trading at 34.88 in Bangkok. The currency has lost 15 percent so far this year as foreign investors sold $4.3 billion more Thai shares than they bought.

Malaysian Ringgit

Malaysia's ringgit slid to its weakest since December 2006 as the Kuala Lumpur Composite Index of stocks declined as much as 6.7 percent today.

``The ringgit has more downside as the stock market is still searching for the bottom,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit fell as much as 0.5 percent to 3.6005 per dollar before trading at 3.5830, according to data compiled by Bloomberg.

Elsewhere, Vietnam's dong was little changed at 16,842.5. The Philippine peso rose 0.6 percent to 49.12. Taiwan's dollar climbed 0.2 percent to 33.438. India's financial markets were shut today for a public holiday.

To contact the reporter on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.