Saturday, June 20, 2009
Indonesia’s rupiah completed its biggest weekly drop in seven months and led losses in Asian currencies as overseas investors dumped emerging-market assets on concern a global recovery is stalling.
The Bloomberg-JPMorgan Asia Dollar Index, which gauges the strength of the 10 most-active regional currencies excluding the yen, slumped 0.5 percent this week and Asian stocks slid. Bank of England Governor Mervyn King said a rebound in the U.K. economy may be “protracted” and President Barack Obama said the U.S. will “take a long time to recover.” The Philippine peso was near a seven-week low on concern a widening budget deficit will erode investor confidence.
“The outflow from equities markets in the region is putting downward pressure on Asian currencies,” said Dariusz Kowalczyk, a strategist with SJS Markets Ltd. in Hong Kong. “Add to that the overall strength of the U.S. dollar.”
The rupiah declined 2.9 percent this week to 10,400 per dollar in Jakarta, according to data compiled by Bloomberg. South Korea’s won fell 1.1 percent to 1,268.40, while Malaysia’s ringgit slid 0.9 percent to 3.5360.
The MSCI Asia Pacific Index of stocks dropped 3.8 percent this week, the most since March 6, as investors favored safer bets than emerging-market assets. The ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, has jumped 1.5 percent in the past three weeks.
Mixed Data
Data from the world’s major economies were mixed with some showing signs of a recovery, while others showed a deepening slump. Retail sales in the U.K. unexpectedly dropped in May for the first time in three months, the government said this week, while the Confederation of British Industry said manufacturing export orders slumped to a decade low in June.
The index of U.S. leading economic indicators rose in May for a second consecutive month and a regional factory gauge climbed more than forecast in June. The World Bank this week raised its 2009 growth forecast for China even as the third- largest economy last week reported the biggest monthly slump in its exports on record.
“There’s concern that the rally in global equities is overdone, substantiated by declines in most markets over the last few weeks,” Kowalczyk said.
Public Finances
The peso has dropped 3.1 percent in the past six months, the worst performance among the 10 regional currencies, as the government raised its budget-deficit estimate three times this year. The main tax agency missed its May revenue target, BusinessWorld reported yesterday, citing a person it didn’t identify.
“If this goes on, we may have a possible credit-rating downgrade,” Ricky Cebrero, treasurer of East West Banking Corp. in Manila. “Investors don’t mind a big budget deficit per se. What is worrying is what will stop the government from changing its forecasts again.”
The won fell this week as higher crude oil prices boosted the nation’s fuel bill. The currency traded near a three-week low after U.S. Defense Secretary Robert Gates ordered defensive measures be taken should North Korea attempt to fire a ballistic missile toward Hawaii. The communist state last month tested a nuclear weapon and threatened to attack South Korea.
“There was a steady downward pressure on the won this week,” said Roh Sang Chil, a currency dealer with Kookmin Bank in Seoul. “Nagging concerns about North Korea, albeit not an immediate threat, are adding to the weak sentiment along with foreigners’ stock sales.”
Elsewhere, Taiwan’s dollar declined 0.2 percent this week to NT$32.872 against the U.S. currency and India’s rupee dropped 1.3 percent to 48.255. Thailand’s baht slipped 0.1 percent to 34.15, while Singapore’s dollar weakened 0.3 percent S$1.4563. China’s yuan traded at 6.8362 versus 6.8338 on June 12.
(Bloomberg)
Indonesia’s rupiah completed its biggest weekly drop in seven months and led losses in Asian currencies as overseas investors dumped emerging-market assets on concern a global recovery is stalling.
The Bloomberg-JPMorgan Asia Dollar Index, which gauges the strength of the 10 most-active regional currencies excluding the yen, slumped 0.5 percent this week and Asian stocks slid. Bank of England Governor Mervyn King said a rebound in the U.K. economy may be “protracted” and President Barack Obama said the U.S. will “take a long time to recover.” The Philippine peso was near a seven-week low on concern a widening budget deficit will erode investor confidence.
“The outflow from equities markets in the region is putting downward pressure on Asian currencies,” said Dariusz Kowalczyk, a strategist with SJS Markets Ltd. in Hong Kong. “Add to that the overall strength of the U.S. dollar.”
The rupiah declined 2.9 percent this week to 10,400 per dollar in Jakarta, according to data compiled by Bloomberg. South Korea’s won fell 1.1 percent to 1,268.40, while Malaysia’s ringgit slid 0.9 percent to 3.5360.
The MSCI Asia Pacific Index of stocks dropped 3.8 percent this week, the most since March 6, as investors favored safer bets than emerging-market assets. The ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, has jumped 1.5 percent in the past three weeks.
Mixed Data
Data from the world’s major economies were mixed with some showing signs of a recovery, while others showed a deepening slump. Retail sales in the U.K. unexpectedly dropped in May for the first time in three months, the government said this week, while the Confederation of British Industry said manufacturing export orders slumped to a decade low in June.
The index of U.S. leading economic indicators rose in May for a second consecutive month and a regional factory gauge climbed more than forecast in June. The World Bank this week raised its 2009 growth forecast for China even as the third- largest economy last week reported the biggest monthly slump in its exports on record.
“There’s concern that the rally in global equities is overdone, substantiated by declines in most markets over the last few weeks,” Kowalczyk said.
Public Finances
The peso has dropped 3.1 percent in the past six months, the worst performance among the 10 regional currencies, as the government raised its budget-deficit estimate three times this year. The main tax agency missed its May revenue target, BusinessWorld reported yesterday, citing a person it didn’t identify.
“If this goes on, we may have a possible credit-rating downgrade,” Ricky Cebrero, treasurer of East West Banking Corp. in Manila. “Investors don’t mind a big budget deficit per se. What is worrying is what will stop the government from changing its forecasts again.”
The won fell this week as higher crude oil prices boosted the nation’s fuel bill. The currency traded near a three-week low after U.S. Defense Secretary Robert Gates ordered defensive measures be taken should North Korea attempt to fire a ballistic missile toward Hawaii. The communist state last month tested a nuclear weapon and threatened to attack South Korea.
“There was a steady downward pressure on the won this week,” said Roh Sang Chil, a currency dealer with Kookmin Bank in Seoul. “Nagging concerns about North Korea, albeit not an immediate threat, are adding to the weak sentiment along with foreigners’ stock sales.”
Elsewhere, Taiwan’s dollar declined 0.2 percent this week to NT$32.872 against the U.S. currency and India’s rupee dropped 1.3 percent to 48.255. Thailand’s baht slipped 0.1 percent to 34.15, while Singapore’s dollar weakened 0.3 percent S$1.4563. China’s yuan traded at 6.8362 versus 6.8338 on June 12.
(Bloomberg)
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