Asian Currencies: Taiwan Dollar Slumps Before GDP; Won Falls

By Lilian Karunungan

Feb. 18 (Bloomberg) -- Asian currencies fell, with Taiwan’s dollar dropping to a five-year low before a government report today that economists say will show the island’s gross domestic product shrank by a record.

South Korea’s won slid to the weakest level in more than two months and Malaysia’s ringgit declined to the lowest since November 2006, on speculation investors are shunning emerging- market assets as exports and regional economies slump. The MSCI Asia-Pacific Index of stocks traded at the lowest in three months and is down 13 percent this year.

“The unrest in global markets is spreading, shaking investor confidence in emerging markets,” said Kim Jae Eun, an economist with Hana Daetoo Securities Co. in Seoul. “A deepening slowdown will make financial firms more vulnerable.”

Taiwan’s dollar fell to NT$34.682 versus the U.S. currency, the weakest since June 2003, and traded at NT$34.650 as of 11:30 a.m. local time, according to Taipei Forex Inc. The won dropped 0.5 percent to 1,462.45 and touched 1,477.30, the lowest since Dec. 5. Malaysia’s ringgit declined as much as 0.5 percent to 3.6615.

Taiwan’s government may say today that GDP plunged 6.82 percent in the fourth quarter from a year earlier, the biggest contraction since records began in 1952, according to the median estimate of 18 economists surveyed by Bloomberg News. The statistics bureau releases the report at 4.30 p.m. in Taipei.

“The moves in these currencies like the ringgit, Korean won, Taiwan dollar, and even the Singapore dollar are probably quite overdone already,” said Wai Ho Leong, a regional economist in Singapore at Barclays Plc, the third-biggest foreign-exchange trader. “We’re pretty close to a technical retracement.”

Dollar Demand

The won extended this year’s loss to 14 percent as Finance Minister Yoon Jeung Hyun said today the economic slump is accelerating and that the government will place its priority on stabilizing financial markets.

Korea’s Kospi stock index fell 1.6 percent as global funds sold more shares than they bought for a seventh day, the longest run of net sales since Nov. 20.

Demand for dollars is decreasing in Korea as the amount of foreign-currency debt maturing every month this year is half the levels of the fourth quarter, a central bank official said.

Monthly foreign-debt payments by local banks have dropped to about $4 billion, from between $8 billion and $9 billion in the final three months of 2008, Ahn Byung Chan, director general of the Bank of Korea’s international bureau, said in an interview yesterday from Seoul.

Malaysia Economy

Indonesia’s rupiah is down 8.7 percent this year, and the ringgit 5.6 percent, the second and third-worst performing Asian currencies after the won.

Malaysia will revise its forecast for an economic expansion of 3.5 percent this year, Deputy Prime Minister Najib Razak said in parliament yesterday. The government is set to unveil on March 10 a “bigger and more comprehensive” stimulus program than the 7 billion ringgit ($1.9 billion) unveiled in November, he said.

Elsewhere, the Philippine peso declined 0.1 percent to 47.787 per dollar. The rupiah dropped 0.8 percent to 11,938, while the Thai baht traded 0.2 percent lower at 35.34. Vietnam’s dong was little changed at 17,484.50.

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