Asian Currencies: Rupiah, Won Extend Slide on Slowdown Concern

By David Yong

Dec. 4 (Bloomberg) -- Indonesia’s rupiah fell, leading losses among Asian currencies, on speculation the central bank won’t be able to sustain its policy of fighting inflation amid a deepening economic slump.

South Korea’s won and Taiwan’s dollar extended declines on concern exports will slow after reports showed capital spending in Japan slumped last quarter and the Federal Reserve Beige Book said the U.S. economy weakened across all regions since mid- October. Bank Indonesia will keep the benchmark rate for bill sales at 9.5 percent today for a second month, according to 17 of 23 economists surveyed by Bloomberg News, with six expecting a cut. The decision may weigh on the rupiah, said Tetsuo Yoshikoshi at Sumitomo Mitsui Banking Corp.

“Usually cutting rates should impact negatively on the currency,” Singapore-based Yoshikoshi said. “Amid all the central banks in the region cutting rates, Bank Indonesia not deciding on a rate cut will be negative on the economy itself, which could affect the currency adversely.”

The rupiah fell 1.3 percent to 12,103 versus the dollar as of 10:45 a.m. in Jakarta, according to data compiled by Bloomberg, adding to a 9.2 percent loss over the past month. The won dropped 0.1 percent to 1,471.50 in Seoul and the Taiwan’s dollar declined 0.1 percent to NT$33.5634.

Indonesia’s economy, Southeast Asia’s biggest, grew 6.1 percent in the third quarter, easing from 6.4 percent in the preceding three months. Exports grew 4.9 percent in October versus a 28.5 percent gain in September, the statistics bureau said on Dec. 1.

“There’s still a 50 percent chance that Bank Indonesia will cut the rate by 25 basis points,” Yoshikoshi said.

ECB Rate Cut

Half of Asia’s most-traded currencies outside Japan fell. Singapore’s dollar advanced 0.4 percent to S$1.5247, the most in a week, while Malaysia’s ringgit added 0.1 percent to 3.6361 against the U.S. currency.

The euro fell to $1.2673 against the dollar in Tokyo from $1.2717 late in New York yesterday, and weakened to 118.58 yen on speculation the European Central Bank will cut interest rates by half a percentage point to 2.75 percent today, reducing the appeal of assets denominated in that region.

South Korea’s won fell for a third day on concern a global slowdown will tip the economy into recession for the first time in a decade. The currency’s 37 percent tumble this year is the most in Asia outside of Japan as banks and companies scrambled for funds to repay overseas debt.

Funding Shortage

“The unrest over dollar funding remains and the won will be under pressure until the problem is solved,” said Chun Chong Woo, an economist with Standard Chartered First Bank Korea Ltd. in Seoul.

Taiwan’s dollar fell to a five-week low after Taiwan Semiconductor Manufacturing Co., largest producer of chips designed by other companies, said it will ask employees to take unpaid leave. A report next week may show exports for November dropped the most since February 2002.

The expected slowdown in exports is “weighing on the currency,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “Taiwan is in the same boat with Korea and Japan as far as the exports slowing down.”

Shipments dropped 12.2 percent in November from a year earlier, after declining 8.3 percent in October, according to a Bloomberg News survey of economists before the Ministry of Finance report on Dec. 8.

Elsewhere, the Thai baht declined 0.3 percent to 35.69. The Chinese yuan was little changed at 6.8837 and the Vietnamese dong advanced 0.2 percent to 16,945.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.