Asian Currencies: Won, Yuan Decline in Week on Slowdown, Stocks

By David Yong

Dec. 5 (Bloomberg) -- Asian currencies fell this week, paced by South Korea’s won and the Chinese yuan, after reports showed exports dwindled because of recessions in the U.S., Europe and Japan.

Eight of the region’s 10 most-traded currencies excluding the yen weakened over the past five days on signs China’s economy, the world’s fastest growing, is decelerating after manufacturing shrank by the most on record in October. The won extended a four-month slide as overseas investors sold local shares and companies sought more dollars to repay overseas debt.

“Concerns over a shortage of dollars remain with the funding difficulties at banks not showing any sign of thawing,” said Park June Geun, a currency dealer in Seoul at BNP Paribas, Europe’s third-largest bank by market value. “The won may test 1,500 during the day.”

The won fell 0.4 percent this week to 1,475.25 per dollar as of 1:51 p.m. local time, according to Seoul Money Brokerage Services Ltd. The yuan’s five-day 0.7 percent drop to 6.88 is the steepest since a dollar peg was scrapped in July 2005.

Korea’s one-year cross-currency swap rate was below zero for a record 12th day signaling demand for dollars. The swap, which should be positive for lending won because of higher benchmark interest rates, was at minus 0.55, after touching a record minus 0.7 yesterday. It averaged 3.3 percent in the five years before July 2007.

Global funds sold more Korean shares than they bought for a fourth day, according to Korea Exchange. Investors pulled $37 billion out of Korean shares this year, data compiled by Bloomberg show.

U.S. Job Report

The dollar headed for a weekly decline against the yen and euro before a Labor Department report that economists say will show accelerating job cuts.

The dollar bought 92.51 yen in Tokyo from 92.23 yen late yesterday in New York, on course for a 3.2 percent decline this week. The euro was at $1.2751 from $1.2777 yesterday and up from $1.2691 at the end of last week. The euro traded at 117.95 yen, down 2.7 percent from Nov. 28.

U.S. payrolls shrank by 333,000 workers in November after a drop of 240,000 in October, according to a Bloomberg News survey of economists. The report is due at 8:30 a.m. in Washington.

The Chinese yuan posted a weekly decline on speculation Treasury Secretary Henry Paulson’s calls for a stronger currency won’t stop China from weakening it to support exporters. Paulson is in Beijing for talks with Chinese officials.

Exports Slump

Manufacturing in Asia’s second-largest economy shrank by the most on record and export orders plunged, the China Federation of Logistics and Purchasing said on Dec. 1.

Taiwan’s dollar declined 0.6 percent to a five-week low of NT$33.498 against the U.S. currency and Malaysia’s ringgit slipped to 3.6375, near the lowest since November 2006, as slowing exports prompted investors to sell regional assets.

“Attention has been on the trade numbers” and that is likely to see the Taiwan dollar weaken further, said Maya Pinto, an economist at IDEAglobal in Singapore. “We have seen foreigners exiting the stock market in the past three sessions, and we should see that sustained today as well.”

Taiwan’s exports dropped 12.4 percent in November from a year earlier, the most since February 2002, according to a Bloomberg News survey of economists before the Ministry of Finance report on Dec. 8. Shipments fell 8.3 percent in October. Malaysia’s exports dropped 2.6 percent in October, the government said yesterday, the first decline since July 2007.

“If all the stimulus plans don’t kick in fast enough, recovery may take longer than expected in 2010,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “The bias will be for more rate cuts and that will likely have some impact on the ringgit.”

Elsewhere, Indonesia’s rupiah traded at 12,000 per dollar versus 12,100 a week ago and Thailand’s baht dropped 0.5 percent to 35.68. The Singapore dollar weakened 1 percent to S$1.5237, the Philippine peso declined 0.5 percent to 49.185 and the Vietnamese dong traded at 16,977 versus 16,973 on Nov. 28.

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