Asia Currencies Drop as Demand for Emerging-Market Assets Falls

By Lilian Karunungan

Nov. 11 (Bloomberg) -- Asian currencies declined on concern export earnings will be hurt by the global slowdown, sending stocks lower and cutting demand for emerging-market assets.

Seven of Asia's 10 most-active currencies outside Japan weakened as regional shares followed the U.S. lower. Indonesia's rupiah fell for a second day on speculation overseas investors, who sold more of the nation's stocks than they bought this month, will increase sales because of the risk of a world recession.

``There's focus now on weaker growth, a slowdown in exports, and a fall in consumption,'' said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. ``All these will be affecting the equity indexes as well as Asian currencies.''

The rupiah dropped 1.1 percent to 11,225 per dollar as of 11:35 a.m. in Jakarta, from 11,100 yesterday, according to data compiled by Bloomberg. The Philippine peso fell 0.7 percent to 48.79 in Manila, according to Tullett Prebon Plc. Malaysia's ringgit declined 1 percent to 3.5825.

The MSCI Asia-Pacific Index of regional stocks fell 1.5 percent after the Standard & Poor's 500 Index retreated 1.3 percent yesterday.

The Japanese yen rose against the Australian and New Zealand dollars on speculation the slump in global stocks prompted investors to sell higher-yielding assets and pay back loans in Japan.

Against the Australian currency, the yen climbed to 66.15 from 68.96 in Asia yesterday and gained to 57.64 per New Zealand dollar to 57.64.

Philippine Remittances

The Philippine peso dropped on speculation remittances from Filipinos working abroad may slow as the world economy weakens.

Australian business confidence declined to a record last month, raising speculation the country is headed for its first recession since 1991. The International Monetary Fund on Nov. 7 predicted the first simultaneous contraction in the U.S., Japan and the euro region in the post-World War II era.

``Demand for Filipino workers may decline as the global economy slows,'' said Tynee Tan, who helps manage about $1 billion at Rizal Commercial Banking Corp. in Manila. ``We will probably be registering slower remittances for this year and next.''

Remittances, which account for around 10 percent of the Philippines $144 billion economy, may slow for the remainder of the year, central bank Deputy Governor Nestor Espenilla said last month.

Won Erases Loss

Korea's currency has lost 23 percent over the past three months, Asia's worst performer, as credit markets froze and caused a shortage of dollars for banks and companies to service maturing debt.

The won erased an earlier loss to trade little changed at 1,327.10 per dollar in Seoul, according to Seoul Money Brokerage Services Ltd. The currency has declined 30 percent this year, the most in Asia.

Fitch Ratings lowered its credit ratings outlook for Korea to negative from stable yesterday because currency reserves may fall. Investors overseas sold more Korean stocks than they bought today, wiping out yesterday's net purchases, according to the Korea Exchange.

Elsewhere, the Singapore dollar dropped 0.5 percent to S$1.4966. The Taiwan dollar was at NT$32.848 compared with NT$32.823 yesterday. The Thai baht weakened 0.2 percent to 34.93 and Vietnam's dong rose 0.3 percent to 16,945.

To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net.