Ringgit leads Asian currency declines

Asian currencies declined, led by Malaysia’s ringgit and Singapore’s dollar, on concern a slowing US economy will hurt the global recovery and damp demand for the region’s exports.

The Bloomberg-JPMorgan Asia Dollar Index fell from near a 14-year high after a report showed yesterday that manufacturing in the world’s largest economy dropped to a two-year low in July. Malaysia’s trade ministry will say on Aug. 4 that overseas shipments rose 5.8 per cent in June from a year earlier, compared with an average increase of 8.2 per cent in the previous 12 months, according to the median forecast of economists in a Bloomberg survey.

“Weak data out of the US is capping the upside of regional currencies in the short term,” said Hideki Hayashi, a global economist at Mizuho Securities Co in Tokyo. “However, speculation of more rate hikes in the region is providing the floor. Money should still come into the region.”

The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, fell 0.1 per cent to 120.09 as of 10:16 a.m. in Hong Kong. The ringgit dropped 0.3 per cent to 2.9488 per dollar and the Singapore dollar slipped 0.1 per cent to S$1.2016, according to data compiled by Bloomberg.

Manufacturing Index

The US Institute for Supply Management’s factory index slumped to 50.9 in July from 55.3 a month earlier. Figures lower than 50 signal contraction. Reports today will show personal income and spending in the US stagnated in June, according to median forecasts in Bloomberg News surveys. The US is the second-largest export market for Taiwan as well as South Korea and the third-largest for Thailand.

The ringgit retreated from near a 14-year high as prospects of exports moderating prompted Credit Suisse Group AG to lower its 2011 economic growth forecast for Malaysia to 5.3 per cent from 5.6 per cent, according to an August 1 research note.

“There’s a bit of concern about the downside risk to growth with the latest economic reports,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. “This could delay further policy tightening” in the region, he said.

Fund Inflows

South Korea’s won retreated from near the strongest level in three years on speculation the government is considering measures to curb overseas inflows. Policy makers are looking at ways to regulate foreign investors’ “excessive” investment in won-denominated bonds and want to curb growth in banks’ short- term debt, Internet news provider Edaily said yesterday, citing an unidentified finance ministry official.

“Speculation that the government may step up regulation is reducing appetite for the currency,” said Chu In Young, a currency dealer at Korea Development Bank in Seoul. “Negative economic data from the US is also weighing on the won.

The won traded at 1.051.15 per dollar, compared with 1,050.70 yesterday. The currency touched 1.048.30 on July 27, the strongest level since August 2008.

Elsewhere, Thailand’s baht, the Philippine peso and Taiwan dollar all fell less than 0.1 perc ent against the greenback to 29.72, 41.95 and NT$28.847, respectively. Indonesia’s rupiah was little changed at 8,460, while China’s yuan declined 0.06 per cent to 6.4380. -- Bloomberg