Asian Currencies Fall, Led By Won, Ringgit, as Stocks Retreat

By Bob Chen

April 15 (Bloomberg) -- Asian currencies declined after the U.S. reported an unexpected drop in retail sales, dimming the outlook for regional exports and prompting investors to seek safer bets than emerging-market assets.

Six of Asia’s 10 most-used currencies excluding the yen fell, led by slides in South Korea’s won and Malaysia’s ringgit, and the MSCI Asia Pacific Index of shares snapped a four-day rally. The Standard & Poor’s 500 Index retreated from a two- month high and futures contracts pointed to further weakness.

“It’s a modest adjustment, it’s natural given that U.S. stocks were down a bit,” said Thomas Harr, a senior currency strategist at Standard Chartered Bank in Singapore. “It depends a lot on what happens with U.S. stocks and risk appetite generally.”

The won dropped 1.1 percent to 1,338.22 per dollar in Seoul, the biggest decline in a week. The ringgit was 0.6 percent lower at 3.6090 as of 4:46 p.m. in Kuala Lumpur. Taiwan’s dollar slipped 0.5 percent to NT$33.79.

The S&P 500 Index of U.S. stocks slid 2 percent yesterday after the Commerce Department reported a 1.1 percent decrease in March retail sales. Economists surveyed by Bloomberg News forecast a 0.3 percent increase in sales.

Concern a global recession is deepening spurred demand for the perceived safety of the Japanese yen and the U.S. dollar. The yen climbed to 130.15 per euro, from 131.25 late yesterday in New York. It was little changed versus the dollar at 99.05.

Deepening Slump

U.S. reports later today may show industrial output declined for a fifth month and a gauge of manufacturing contracted, according to economists surveyed by Bloomberg News. South Korea today reported its highest unemployment rate since 2005 and Finance Minister Yoon Jeung Hyun said the local jobs market is likely to remain weak.

The Korean won fell for the first time in three days. The nation’s economy will shrink 2.4 percent this year, the first contraction since 1998, the Bank of Korea forecast on April 10.

The ringgit fell the most in a week after a local research institute forecast the economy will shrink this year. Singapore, Malaysia’s biggest overseas market, yesterday said its gross domestic product may drop at a record pace.

“You are going to get sporadic weak data and that’s going to restrain risk-taking in the market,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “Volatile trade in the ringgit is only to be expected as we don’t expect any strong economic recovery until the fourth quarter.”

Shrinking Economies

Malaysia’s economy may contract as much as 3.8 percent this year at worst, the Malaysian Institute of Economic Research said today, lowering its estimate to a contraction of 2.2 percent, from a previous forecast of 1.3 percent growth. A Singapore trade ministry report yesterday showed the city-state’s GDP shrank an annualized 19.7 percent in the first quarter from the previous three months, the most on record.

Taiwan’s dollar weakened on concern the government’s stimulus spending is straining public finances amid a recession. Standard & Poor’s Rating Services yesterday cut the outlook on the island’s long-term credit rating to negative from stable, citing a “marked deterioration in the government’s fiscal position.”

The jobless rate may exceed 6 percent in the coming months and peak in September, the Chinese-language Commercial Times reported today, citing Vice President Vincent Siew.

More Bad Data

“Taiwan’s economic fundamentals haven’t changed,” said Tigr Cheng, an economist at Polaris Securities Co. in Taipei. “We are expecting more bad data to come in May or June, which will take the Taiwan dollar weaker.”

Thailand’s government yesterday declared April 16 and April 17 as public holidays to help “restore order” following violent anti-government protests. The country’s financial markets have been shut since April 10, before the Thai New Year holiday.

Elsewhere, the Philippine peso fell 0.3 percent to 47.805 against the U.S. currency and the Singapore dollar declined 0.2 percent to S$1.5009. Vietnam’s dong climbed 0.1 percent to 17,743, while Indonesia’s rupiah rose 0.1 percent to 10,890. India’s rupee climbed 0.3 percent to 49.735 and China’s yuan was little changed at 6.8329.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net