By Lilian Karunungan
March 7 (Bloomberg) -- South Korea’s won and the Indian rupee led declines in Asian currencies this week on speculation investors will stay away from emerging-market assets as the global financial slump deepens.
The won posted its fifth weekly drop, approaching an 11- year low, on concern that global market turmoil will make it difficult for banks to raise funds needed to service overseas debt. The rupee reached a record low on March 3 as the benchmark stock index slumped and overseas funds increased sales of local equities. Malaysia’s ringgit slid for the fourth week as a government report showed exports tumbled the most in 15 years.
“I am bearish on all Asian currencies, like the Singapore dollar, the Korean won, the Indonesian rupiah, the Malaysian ringgit and the Philippine peso,” said Ken Hirose, a portfolio manager in Tokyo at Nikko Asset Management Co., which oversees the equivalent of $109 billion in assets globally. “All of them should be much weaker against the U.S. dollar because globally everybody is unwinding their positions.”
The won fell 1 percent this week to 1,550 per dollar at the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. The currency touched 1,597, the lowest since 1998. The rupee declined 1.1 percent to 51.7025 in Mumbai. The rupiah dropped 0.9 percent this week and traded at 12,090 in Jakarta, according to data compiled by Bloomberg.
China, Taiwan and the Philippines will report export data next week, with economists in a Bloomberg survey expecting no change for China and a contraction for Taiwan. Policy makers at the Bank of Korea will also meet next week after cutting the benchmark interest rate to a record-low 2 percent last month.
Tough Spot
The Korean currency declined 19 percent so far this year, the worst among the 10 most-traded currencies in Asia outside Japan. The government plans to sell as much as $1 billion of global bonds this month, online news agency MoneyToday reported yesterday, citing unidentified officials. The Ministry of Strategy and Finance said it hasn’t determined the sale’s “timing or size.”
“Investors are on a very tough psychological spot as global turbulence is showing no signs of abating,” said Park Sang Bae, a currency dealer with Industrial Bank of Korea in Seoul. “March is a difficult month for the won due to dividends paid to foreign share holders and sizable debt set to mature.”
The Kospi stock index fell for a fourth week, tracking a slump in the Standard & Poor’s 500 Index to the lowest level since 1996.
South Korean banks had $92.6 billion of foreign debt as of Jan. 31, including $38.3 billion maturing by the end of this year, according to data provided on Feb. 27 by the Bank of Korea. The foreign debt included loans, bonds and other securities, the central bank said.
Fund Sales
Overseas investors increased sales of Indian equities in the first three days of this week. They sold an average $130.4 million more than they bought, compared with $83.9 million last week, data from the Securities & Exchange Board of India show.
Net sales by foreign funds reached $2.1 billion this year, adding to a record $13.3 billion in 2008. The rupee has weakened 5.7 percent this year.
The Philippine peso touched its lowest level in three months this week on concern remittances from overseas Filipino workers and exports will slide. Nikko Asset Management Co., HSBC Holdings Plc and Royal Bank of Scotland Plc say the Philippine peso will depreciate.
Remittances Concern
Remittances, which reached a record $16.4 billion last year, probably will fall 20 percent this year, according to HSBC, Europe’s largest bank by value. RBS predicts remittances will drop 8 percent, even though central bank Governor Amando Tetangco said Feb. 25 he expects no change.
The peso has lost 2.1 percent this year. It rebounded to 48.52 a dollar yesterday, after touching 49.26 on March 3 in Manila, the lowest level since Dec. 9, according to Tullett Prebon Plc.
Taiwan’s dollar rose, snapping a three-week slump, as China proposed an economic accord. Premier Wen Jiabao said this week that China wants to accelerate normalization of cross-straits trade relations.
“Political risk declined in Taiwan as it seems China is really intent on improving the relationship,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “There’s some relief in the currency market.”
Taiwan’s dollar strengthened 0.5 percent this week to NT$34.780 against the U.S. currency, according to Taipei Forex Inc. The currency will fall to NT$36 at the end of March, SJS’s Kowalczyk said.
Malaysia’s ringgit touched the lowest level in more than three years yesterday as a trade ministry report showed overseas shipments dropped 27.8 percent in January from a year earlier, after slipping 14.9 percent in December.
The ringgit dropped 0.4 percent this week to 3.7175 a dollar, according to data compiled by Bloomberg. The currency reached 3.7390, the lowest since February 2006.
Elsewhere, the Thai baht traded at 36.07 versus 36.15 last week and Vietnam’s dong was little changed at 17,481.
To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net
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