Asian Currencies: Indonesian Rupiah, Won Decline; Peso Gains

By Kim Kyoungwha and Lilian Karunungan

Dec. 3 (Bloomberg) -- Indonesia’s rupiah fell on concern the global credit crisis will make it harder for local companies to service their foreign-currency debt. The Philippine peso advanced.

Six of the 10 most-traded currencies in Asia outside Japan weakened after an Australian government report showed the economy grew at the weakest pace in eight years last quarter, adding to signs the global economic stagnation is worsening. Indonesia’s currency has lost 25 percent in the past three months, Asia’s biggest loser, according to Bloomberg data.

“Corporations are buying dollars to pay their foreign debt,” said Rully Nova, a currency trader at PT Bank Himpunan Saudara in Jakarta. “The rupiah is now in a new equilibrium.”

The rupiah declined 0.8 percent to 12,150 versus the dollar as of 2:49 p.m. in Jakarta, according to Bloomberg data. The currency will trade between 12,000 and 12,300 today, Nova said.

Indonesian companies should adjust to the rupiah’s “temporary equilibrium,” Finance Minister Sri Mulyani Indrawati said on Nov. 19 in Jakarta. Australia’s economy grew 0.1 percent from the second quarter, when it gained a revised 0.4 percent, the Bureau of Statistics said in Sydney.

The yen traded near a five-week high against the dollar before reports that economists say will show accelerating U.S. job cuts and a deepening contraction in services.

The dollar bought 93.13 yen in London versus 93.18 late yesterday in New York. The yen traded at 117.95 against the euro, compared with 118.44. The euro weakened to $1.2664 from $1.2714.

Export Markets

“Regional currencies will continue to weaken until export markets bottom out and until risk appetite recovers,” said Dwyfor Evans, a currency strategist at State Street Global Markets in Hong Kong. “The export-led Asian economies are very vulnerable to slowdown” in the U.S.

China’s yuan traded near the lowest level in more than five months, falling by the 0.5 percent daily limit from the central bank’s reference rate, on speculation policy makers favor a weaker currency to support exports. It traded at 6.8845 per dollar today, from 6.8870 yesterday.

U.S. Treasury Secretary Henry Paulson yesterday urged China to allow more appreciation in the yuan before trade talks in Beijing on Dec. 4 and 5. The People’s Bank of China allowed the yuan to fall 0.86 percent against the dollar in the last three trading days, after keeping it almost unchanged for four months.

Retail Sales

South Korean won fell for a second day after slowing growth in retail sales compounded concerns that the economy will enter a recession. The won slid 0.3 percent to 1,469 per dollar.

Sales rose 1.6 percent in October from a year earlier, after climbing a revised 4.7 percent the previous month, government data showed. Vice Finance Minister Kim Dong Soo said in Seoul today that the economy may pick up in a year’s time.

“The won’s weakness has further to go as the economic picture over the next six months looks quite grim,” said Lee Jin Woo, head of foreign exchange strategy with NACF Futures Corp. in Seoul. “The volatility may increase as trading shrank with most banks ready to close books.”

The Philippine peso advanced, snapping two days of losses, on speculation that remittances from overseas Filipino workers will increase this month for Christmas spending. The currency rose 0.6 percent to 49.175 versus the dollar.

Money sent back to the Philippines increased 16.9 percent from a year earlier to $1.33 billion, the central bank said in a statement on Nov. 17. Remittances grew 10.4 percent in August.

Elsewhere, Thailand’s baht was little changed at 35.59 per dollar. Malaysia’s ringgit was at 3.6442 versus 3.6395 yesterday. The Vietnamese dong was little changed at 16,978.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.