Asian Currencies: Ringgit, Singapore Dollar Decline During Week

By Lilian Karunungan and David Yong

Jan. 10 (Bloomberg) -- Most Asian currencies dropped this week, led by the Malaysian ringgit and the Singapore dollar, on concern investors will exit emerging markets amid signs a global recession is deepening.

The ringgit had its biggest weekly loss against the U.S. currency since June 2007 after reports showed industrial output fell the most since 2004 and exports had their biggest slide in almost seven years. Singapore’s dollar completed its worst week since October after the government said the economy may shrink more than previously forecast.

“We haven’t seen the trough yet in terms of the declining economic trends,” said Zulkifli Hamzah, head of research at MIDF Amanah Investment Bank Bhd. in Kuala Lumpur. “The ringgit may be susceptible to short-term fund outflows.”

The ringgit traded at 3.5445 per dollar as of 4:11 p.m. yesterday in Kuala Lumpur, down 2.2 percent from 3.4662 at the end of last week, according to data compiled by Bloomberg. The Singapore dollar slid 1.7 percent to S$1.4782. The South Korean won, which lost 26 percent last year, Asia’s worst performance, slid 1.6 percent this week to 1,343.

Malaysia’s industrial production dropped 7.7 percent from a year earlier in November after a revised 2.9 percent decline the previous month, the government reported yesterday. Exports fell 4.9 percent in November, data earlier in the week showed.

China, the world’s fourth-largest economy, will next week report a 5.3 percent slide in overseas sales for December, according to the median estimate of economists surveyed by Bloomberg News. That would be the largest decrease in more than a decade.

Deepening Recession

Singapore’s economy is forecast by the government to shrink as much as 2 percent this year, twice the pace of a November prediction. Growth was 1.5 percent in 2008, the slowest in seven years.

The U.S. dollar headed for its first weekly loss against the yen in three weeks as reports showed a shrinking labor market. The currency traded at 91.14 yen in Tokyo, versus 91.83 at the end of last week and 91.20 late in New York on Jan. 8.

South Korea’s won weakened to the lowest level in 2009 after the central bank cut interest rates to a record to revive growth in Asia’s fourth-largest economy.

Rate Cuts

The Korean currency fell for a third week as a retreat in local stocks prompted foreign investors to sell more shares than they bought for a second day, according to Korea Exchange. The Bank of Korea trimmed its seven-day repurchase rate by half a percentage point to 2.5 percent yesterday, the fifth reduction since the start of the last quarter. The Bank of Thailand will probably join Korea, Indonesia and Taiwan in lowering borrowing costs when policy makers meet on Jan. 14, according to a Bloomberg News survey of economists.

“Those who were betting on bigger rate cuts are disappointed,” said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. “It’s premature to talk about a floor, or recovery for the markets and the economy.”

The Kospi index lost 2 percent, sliding for a second day. The economy is “deteriorating rapidly” as demand cools faster than expected at home and abroad, the central bank said in a statement yesterday. Exports declined for a second straight month in December.

Elsewhere, the Indonesian rupiah gained 1 percent this week to 11,020 per dollar, the Thai baht fell 0.1 percent to 34.83 and the Philippine peso advanced 0.8 percent to 47.14. The Taiwan dollar was at NT$33.155, weakening from NT$32.86 on Dec. 31, the island’s last trading day before this week. Vietnam’s dong was at 17,476 compared with 17,483 at the end of last week.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.