Asian Currencies: Won Leads Losses as Stocks, Exports May Fall

By Anil Varma and Judy Chen

Oct. 21 (Bloomberg) -- Asian currencies fell, led by South Korea's won, on speculation demand for the region's stocks and exports will decline amid a global economic slump.

The won extended its loss this year to 29 percent, the biggest among the 10 most-active currencies in Asia outside of Japan. South Korea's economic growth is likely to fall short of 4 percent in the second half of this year and the first half of 2009, Central Bank Governor Lee Seong Tae said today.

``The government's action aims to promote stability, but foreigners' selling of local shares will put pressure on the won,'' said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul, the country's largest lender.

The won dropped 1.4 percent to 1,333 per dollar at 1:46 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency lost 15.3 percent in the past month.

Asia's fourth-largest economy is facing the ``most difficult time'' since the 1997-1998 Asian financial crisis and the central bank will adjust rates according to conditions, Lee told lawmakers during an annual parliamentary testimony in Seoul.

Taiwan's dollar fell for a fifth day on speculation slowing global economic growth will damp demand for the nation's exports.

The currency reversed earlier gains after Chi Mei Optoelectronics Corp., Taiwan's second-biggest maker of liquid- crystal displays, lowered executives' salaries by 10 percent from this month to cut costs as demand for panels slows. Separately, AU Optronics Corp., Taiwan's biggest LCD maker, said today it has asked some factory workers to take unpaid leave.

`More Hiccups'

``We still think gains in the Taiwan dollar could be quite modest,'' said Thio Chin Loo, a senior currency analyst at BNP Paribas SA in Singapore. ``Whether there'll be more hiccups along the way is hard to say.''

The currency traded at NT$32.593 against the U.S. dollar as of 12:46 p.m. local time, from NT$32.580 yesterday, according to Taipei Forex Inc. It earlier touched NT$32.65, the weakest level since Oct. 17, 2007.

Malaysia's ringgit ended two days of gains. The currency traded at 3.5265 per dollar as of 12:46 p.m. in Kuala Lumpur versus 3.5225 yesterday, according to data compiled by Bloomberg. The currency declined as low as 3.5305 yesterday, the weakest since December 2006.

Indonesia's rupiah gained the most in a week and India's rupee halted a four-day loss as Asian stocks extended gains and money market rates declined, following government efforts to unlock credit markets.

The MSCI Asia Pacific Index of regional shares gained 1.7 percent, rising for a third day. Japan's Nikkei 225 Stock Average added 2.4 percent. South Korea guaranteed $100 billion of banks' foreign-currency debt, joining Indonesia, Singapore, Malaysia and Hong Kong in providing state backing for lenders. The Reserve Bank of India yesterday unexpectedly cut its benchmark rate for the first time since 2004.

`Liquidity Measures'

``Following the improvement in the U.S. market overnight, we're also seeing improvement in some of the so-called riskier Asian currencies like the rupiah,'' said Goh Puay Yeong, a currency strategist at Barclays Capital Plc in Singapore. ``We have been seeing more liquidity measures being rolled out by policy markers in Asia. That's helping to improve sentiment.''

The rupiah rose 0.8 percent to 9,813 per dollar as of 11:57 a.m. in Jakarta, according to data compiled by Bloomberg. The currency may rise to 9,750 today, Goh said.

The Indian rupee traded at 48.9750 per dollar as of 10:19 a.m. in Mumbai from 49.0125 yesterday, according to data compiled by Bloomberg.

``The rupee trend is mildly positive compared with yesterday on account of stock-market gains across the region and elsewhere,'' said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. The currency may trade between 48.90 and 49.10 today, according to Bhatt.

Elsewhere, the Thai baht weakened 0.1 percent to 34.31 against the U.S. currency, while the Singapore dollar gained 0.2 percent to S$1.476. Vietnam's dong was unchanged at 16,600.

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net; Bob Chen in Hong Kong at bchen45@bloomberg.net.