Asian currencies fell by the most in three months as concern budget deficits in the U.S. and Greece will delay a global economic recovery prompted investors to pull money from riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index fell for a third week, led by losses in the Philippine peso and South Korean won, while the yuan retreated from a 19-year high. President Barack Obama meets Democratic and Republican leaders in Congress on Friday to address the so-called U.S. fiscal cliff, which involves $607 billion of automatic spending cuts and tax increases. Euro-area finance ministers will hold a meeting to discuss aid for Greece.
“It’s follow-through risk-aversion from the U.S. equity market and Asian currencies responded to that,” said Leo Chan, head of regional foreign-exchange and interest-rate trading in Hong Kong at ABN Amro Bank NV. “Greece is really about half- measures being taken and the problem is going to be there for a while to keep the market worried.”
The peso slumped 0.7 percent to 41.335 per dollar in Manila from Nov. 9, according to Tullett Prebon Plc. The won weakened 0.4 percent to 1,092.23, while the Thai baht and Malaysia’s ringgit both fell 0.3 percent to 30.74 and 3.0720, respectively, data compiled by Bloomberg show.
Global funds sold more stocks than they bought in Indonesia, South Korea, Taiwan and Thailand this week, exchange data show. Inflows into emerging-market debt slowed to $665 million in the week to Nov. 14, compared with weekly intakes exceeding $1 billion in the past two months, according to a Morgan Stanley report citing data from U.S. research firm EPFR Global.
The ringgit weakened as economists predicted Malaysia’s economy grew 4.8 percent in the three months through September from a year earlier, the least in five quarters, according to the median forecast in a Bloomberg News survey. Gross domestic product rose 5.4 percent in the preceding period. Bank Negara Malaysia will report the numbers at 6 p.m. local time on Friday.
In Singapore, the economy shrank 5.9 percent in the third quarter from the previous three months, compared with a 2.9 percent contraction forecast in a Bloomberg survey. The government said today GDP will increase 1 percent to 3 percent in 2013, near the slowest pace in three years.
“Risk appetite is tapering as the weak Singapore GDP reflects Asian growth for the third quarter,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “Asian currencies are likely to remain volatile because of concern over global growth.”
The Chinese yuan strengthened 0.15 percent to 6.2356 per dollar during the five days after the government expanded quotas for overseas investors. The currency tested the 1 percent upper limit of the central bank’s fixing rate every day from Oct. 30 through yesterday. It reached a 19-year high of 6.2252 Nov. 14.
China will expand the Renminbi Qualified Foreign Institutional Investor Program quota by 200 billion yuan ($32 billion) from 70 billion yuan, Guo Shuqing, chairman of the securities regulator, said Nov. 11. The Communist Party unveiled its new leaders on Thursday, with Xi Jinping replacing Hu Jintao as party secretary.
“China is encouraging inflows of capital as a way to stimulate its economy, which will keep the yuan at a strong level,” said Daniel Chan, executive vice president at Glory Sky Global Markets Ltd. in Hong Kong. “The key uncertainty now is who will be in charge of economic policies in China’s new leadership and how aggressive they are in terms of reforms.”
Elsewhere in Asia, India’s rupee fell 0.2 percent from a week ago to 54.8550 per dollar and Indonesia’s rupiah dropped 0.1 percent to 9,626. Taiwan’s currency lost 0.4 percent to NT$29.272. Vietnam’s dong was little changed at 20,858.