Asian Currencies Fall, Led by Won at Decade Low, on Growth Woes

By Kim Kyoungwha

Nov. 20 (Bloomberg) -- Asian currencies fell, led by South Korea's won at a decade low, on concern investors will step up sales of emerging-market assets after U.S. stocks sank to a five-year low.

Nine of the 10 most-active currencies in Asia outside Japan weakened today. The won has tumbled 37 percent this year, the worst, after stock indexes in the region lost about half their value as recession in the world's industrialized economies deterred investors. Japan's exports fell the most in almost seven years last month, the government said today. Mazda Motor Corp. and Isuzu Motors Ltd. said they will cut temporary jobs.

``Souring sentiment toward global growth and the increasing threat of deflation is mainly to blame,'' said Emmanuel Ng, a currency strategist with Oversea-Chinese Banking Corp. in Singapore. ``Asian currencies are weighed by the prospect of slowing growth, with Japan's trade deficit this morning a sobering wakeup call.''

Korea's currency fell 2.3 percent to 1,481.05 per dollar as of 12:11 p.m. local time, according to Seoul Money Brokerage Services Ltd. It touched 1,515.05, the weakest since March 1998. The Indian rupee slid to an all-time low of 50.5925 and Malaysia's ringgit dropped to a two-year low of 3.6305 before trading at 3.6225 a dollar.

Consumer prices in the U.S. last month fell by the most on record, signaling deflation, or a prolonged price slide.

Growth in the Asia-Pacific region may expand in 2009 at less than half the pace of the previous two years as the global financial crisis causes the U.S. economy to contract, the Pacific Economic Cooperation Council said today.

Exports Slump

Overseas investors pulled $37.6 billion out of Korean equities this year as the Kospi stock index slumped 49 percent, according to data compiled by Bloomberg. The index is headed for its first annual loss since 2002.

``The foreign-exchange market is simply kneeling to any negative news from the outside world,'' said Lee Myung Hoon, a currency dealer with state-run Industrial Bank of Korea in Seoul. ``The local markets are not in a situation that they can easily shake off the risk from global markets.''

The MSCI Asia Pacific Index slid 4.1 percent, extending this week's loss to 8.6 percent, after Japan's Finance Ministry today said exports, the main engine of growth for the past six years, fell 7.7 percent from a year earlier in October, the most since December 2001.

Imports climbed 7.4 percent, causing a trade deficit of 63.9 billion yen ($666 million), the third shortfall this year.

The yen was quoted at 95.69 per dollar in Tokyo from 95.73 late yesterday in New York. It fell to 119.65 per euro from 119.55.

`Keep Dollars'

Japan's economy contracted for a second consecutive quarter in the three months ended Sept. 30, joining the U.S. and Europe in recession, as businesses cut spending. Growth in China, Japan's largest trading partner, slowed for four quarters.

``The economic situation in the U.S. is causing a drop in risk appetite,'' said Hideki Hayashi, an economist at Shinko Securities Co. in Tokyo. ``The nervous situation means more people are going to keep U.S. dollars and that will have an impact on Asian stocks and currencies.''

Thailand's baht dropped 0.4 percent to 35.17 a dollar, the lowest since March 2007, after Agence France-Presse reported that a bomb blast at a government compound in Bangkok occupied by protesters killed at least one activist and wounded 21.

Elsewhere, the Philippine peso fell 0.2 percent to 49.97 in Manila, according to Tullett Prebon Plc and Taiwan's dollar fell 0.4 percent to NT$33.408. Indonesia's rupiah declined 0.8 percent to 12,300 per dollar, reversing an earlier gain.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.