Asian Currencies Weaken, Led by Korean Won, as Dollar Rebounds

By Judy Chen

March 30 (Bloomberg) -- Asian currencies fell, led by South Korea’s won and Malaysia’s ringgit, as stocks dropped and the dollar rebounded, reducing the appeal of emerging-market assets.

The won extended its decline from an 11-week high on speculation importers and banks are taking advantage of this month’s advance to pay bills. The ringgit snapped a two-day rally before government data this week that may show exports declined for a fifth month in February.

“It’s more of a dollar story for Asian currencies today,” said Nizam Idris, a currency strategist with UBS AG in Singapore. “Investors’ short-dollar positions are being unwound, leading to the dollar’s broad strength.”

The won fell 1.95 percent to 1,374.5 per dollar as of 11:47 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The ringgit declined 0.6 percent to 3.6350. Indonesia’s rupiah weakened 0.8 percent to 11,590. Taiwan’s dollar traded at NT$33.893 from NT$33.779 at the end of last week.

The Dollar Index traded on ICE futures in New York, which tracks the currency against those of six trading partners, climbed 0.2 percent, a third day of gains. The Bloomberg- JPMorgan Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, dropped 0.2 percent. The MSCI Asia Pacific Index of regional equities lost 1.9 percent, the first decline since March 20.

Korean Won

The won has strengthened 12 percent since the end of February, the best performance among Asia’s 10 most-traded currencies, on bets a widening trade surplus will supply the dollars needed to meet payments on overseas debt.

“Many market participants view the won’s recent gains as too rapid, which is spurring a bout of sales,” said Lee Young Chul, a currency dealer with Korea Exchange Bank in Seoul. “The decline may be checked by exporters’ deals and foreign investment in stocks.”

The Bank of Korea today reported that the current-account balance showed a surplus of $3.68 billion for last month, following a $1.64 billion deficit in January. The indicator, which tracks the flow of goods, services and investment income, may show a $5 billion surplus this month, the central bank said.

Indonesian Rupiah

Indonesia’s rupiah declined after JPMorgan Chase & Co. and Bank of America Corp. signaled that March earnings may fall short of the previous two months, when the banks had said they were profitable.

“The rupiah is slightly weaker this morning as the dollar was firmer overnight while Asian stocks are not going too well today,” said Joanna Tan, an economist at Forecast Pte in Singapore. “There is also month-end dollar demand from importers weighing on the rupiah.”

Bank Indonesia cut its 2009 economic growth forecast to between 3 percent and 4 percent as the global crisis may affect exports and investment more than expected, the Jakarta Post reported on March 28. The central bank’s previous growth estimate was between 4 percent and 5 percent.

Malaysian Ringgit

Malaysia’s overseas sales tumbled 25 percent from a year earlier in February, according to the median estimate of economists surveyed by Bloomberg before the April 3 trade report.

“Economic data will continue to show a downtrend over the next two to three months,” said Lam Chee Mun, manager in Kuala Lumpur at TA Investment Management Bhd. with $200 million of assets. “People will find that an easy excuse to lock up recent gains” in stocks and currencies, he said.

Taiwan’s dollar fell, snapping a two-day gain, as local stocks dropped by the most in a month following last week’s 8.7 percent rally.

“We are seeing a bit of a correction in all stocks and currencies today,” said David Cohen, director of Asian Economic Forecasting at Action Economics in Singapore.

Elsewhere, the Thai baht weakened 0.4 percent to 35.33. China’s yuan traded at 6.8353, from 6.8325 late last week. Singapore’s dollar declined 0.3 percent to S$1.5186.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net