Asian Currencies: Taiwan Dollar, Won Decline on Export Slump

By David Yong

March 25 (Bloomberg) -- Asian currencies dropped after a Japanese government report showed exports slumped by a record in February, increasing speculation demand for regional goods will be muted until the global economy starts to emerge from recession.

Asian currencies are headed for a quarterly loss as a deepening financial crisis slows world growth and deters investors from emerging-market assets. Taiwan’s dollar fell by the most in three weeks after a report yesterday showed export orders tumbled for a fifth month in February, the longest stretch since 2001, and as a technical indicator signaled the currency would reverse direction. South Korea’s won declined from near a six-week high as consumer confidence dropped.

“The trade outlook remains dire and this shows that any recovery is unlikely to be meaningful in the first half of the year,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “We should see a pullback in regional stock and currency markets today.”

Taiwan’s currency weakened 0.4 percent to NT$33.930 as of 12 p.m. local time, according to Taipei Forex Inc. The won fell 0.2 percent to 1,386.65 per dollar in Seoul and Indonesia’s rupiah dropped 1 percent to 11,563. Malaysia’s ringgit traded at 3.6305 versus 3.6275 yesterday.

The MSCI Asia Pacific Index of regional stocks fell 0.4 percent after rising yesterday to the highest level since Feb. 10. The gauge is down 6 percent this year and is headed for a sixth quarterly loss.

Export Slump

Nine of Asia’s 10 most-traded currencies excluding the yen weakened against the greenback this year. Korea’s currency has slipped 9.2 percent, headed for a sixth quarter of declines. The rupiah and ringgit were both poised for a fourth quarter of losses while India’s rupee is set for a fifth.

Japan’s exports slumped 49.4 percent in February from a year earlier, the most since at least 1980 when the government started compiling the data, a Finance Ministry report showed in Tokyo. Orders for overseas shipments in Taiwan declined 22.3 percent in the same month, the government said late yesterday.

The Japanese yen traded at 131.95 per euro in Tokyo versus 131.81 late in New York yesterday. It was at 97.84 against the dollar from 97.86. The greenback was little changed at $1.3487 per euro.

Technical Indicator

Taiwan’s dollar weakened as a technical indicator signaled a three-week rally in the currency would end. The currency’s 14-day relative strength index against the greenback fell below 30 in the last two days for the first time this year. A level above 70 or below 30 suggests a currency will change direction.

“The Taiwan dollar would still be bearish in the coming three to six months because its economy is in a deep recession,” said Thomas Harr, a senior currency strategist at Standard Chartered Bank in Singapore. “Lots of Asian currencies have been strengthening perhaps too much last week on optimism even when the market is still in fear.”

Korea’s won also slipped after a Bank of Korea report today showed consumer confidence in Asia’s fourth-largest economy waned in March for the first time since December as unemployment rose.

“The moves we’ve had in all these currencies and equities have been extremely sharp, an extremely rapid reversal,” of the previous declines, said Dwyfor Evans, a strategist at State Street Global Markets LLC in Hong Kong. “A lot of the high-risk currencies look as if they’ve taken a pause here.”

Elsewhere, Singapore’s dollar dropped 0.1 percent to S$1.5139 and the Thai baht declined 0.4 percent to 35.53 against the U.S. currency. The Philippine peso traded at 48.250 from 48.165 yesterday and China’s yuan eased 0.03 percent to 6.8319.

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