Asian Currencies: Rupiah, Won Fall on Stocks, Export Outlook

By Lilian Karunungan

Nov. 13 (Bloomberg) -- The Indonesian rupiah and the South Korean won fell more than 2 percent as the global economic crisis spread to consumer-related industries, sending stocks tumbling and reducing demand for emerging-market assets.

The Philippine peso, Singapore dollar and Taiwan's currency also declined on concern that a looming recession in the U.S., Europe and Japan will damp demand for Asian exports among the region's biggest markets. A report today showed China's factory output increased at the slowest pace in seven years, two days after data showed export growth was the least in four months.

``On top of this risk aversion globally, there's also the underlying concern on growth that's weighing on Asian currencies,'' said Goh Puay Yeong, a Singapore-based foreign- exchange strategist at Barclays Plc, a unit of the U.K.'s second- biggest bank.

The rupiah dropped to its lowest level in seven years and Malaysia's ringgit traded at the weakest in two years after Intel Corp., the largest computer-chip maker, lowered its sales forecasts on weaker demand. Oil prices reached a 21-month low on concern that consumption will slow as the economy cools. The MSCI Asia-Pacific Index of regional shares lost 5.4 percent.

The rupiah fell as low as 11,988, the weakest since 2001, and traded at 11,863 per dollar as of 12 p.m. in Jakarta, according to data compiled by Bloomberg. The won dropped for a third day, declining 2.4 percent to 1,392.50 in Seoul, according to Seoul Money Brokerage Services Ltd.

Currency Intervention

The yen declined from two-week highs against the dollar and the euro after the Reserve Bank of Australia intervened to support its currency.

Japan's currency dropped to 95.58 per dollar in Tokyo from 95.01 late yesterday in New York, when it reached 94.48, the strongest since Oct. 28. It slid to 119.06 against the euro from 118.77.

Bank Indonesia yesterday announced restrictions on foreign- exchange purchases to stem the decline in the rupiah. The central bank sold dollars today, according to Wiling Bolung, head of treasury at ANZ Panin Bank.

``Regional sentiment is still going south,'' said Joanna Tan, an economist at Forecast Pte in Singapore. ``Equities are still looking quite weak. We would see the downside in the rupiah somewhat capped because of the measures imposed.''

Senior Deputy Governor Miranda Goeltom said yesterday Indonesia's central bank will require companies and individuals based in the nation to seek approval for foreign-exchange purchases of more than $100,000 a month. Buyers will have to show they are purchasing currency to settle an underlying transaction, such as paying for imports.

Dollar Demand

Korea's won fell to the lowest level in two weeks as global funds pulled money out of the nation's stocks and bonds, increasing demand for dollars. The economy expanded 0.6 percent in the third quarter from the previous three months, the slowest pace in four years.

``People are increasingly worried that the economy is going to take a hit which is knocking more wind out of the won,'' said Jo Hyun Suk, a currency dealer with Korea Exchange Bank. ``There's real demand for dollars outweighing supplies from exporters.''

The won reached 1,407.5, the lowest since Oct. 29. The currency dropped 33 percent so far this year, the biggest loss among the 10 most-traded Asian currencies outside of Japan.

Nobel economics laureate Robert Mundell said yesterday South Korea's central bank should focus policy on stabilizing its currency against the U.S. dollar.

The Philippine peso slumped to its lowest level since 2006 as the benchmark stock index fell, ending three days of gains.

Economic Outlook

``Investors are still uncertain on the global economic outlook,'' said Paul Joseph Garcia, chief investment officer of the Manila unit of ING Investment Management Ltd. who oversees $1.5 billion in funds. ``For the meantime, they're dumping risky assets and shifting to short-term U.S. Treasury bills.''

The currency fell 1 percent to 49.450 in Manila after reaching 49.675, the weakest since December 2006, according to Tullett Prebon Plc.

Elsewhere, the Taiwan dollar weakened 0.6 percent to NT$33.176 and the Singapore dollar dropped 0.6 percent to S$1.5143. The Thai baht fell 0.3 percent to 35.06. Vietnam's dong was at 16,960 compared with 16,950 yesterday.

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