Won, rupiah dip as funds cut holdings

ASIAN CURRENCIES ROUND-UP

Asian currencies fell, led by South Korea's won and the Indonesian rupiah, as losses in regional stocks prompted investors to reduce their holdings in the region.

The won fell the most since August and the rupiah had the biggest decline since December on concern slowing US economic growth will reduce demand for Asian exports. Asian stocks slipped the most in almost a month after UBS last week said losses at financial companies stemming from the collapse of US subprime mortgages may reach $600 billion.

"Investors don't want to put money into the region when we see growing risks of a US slowdown,'' said Osamu Takashima, chief analyst for global market sales and trading at Bank of Tokyo-Mitsubishi in Tokyo. "That, combined with stock declines, leads fund outflows. The price movements suggest it's not a good idea to invest in Asia.''

The won slipped 0.8 per cent to 946.90 against the dollar at the 3 pm close of onshore trading, according to Seoul Money Brokerage Services. The rupiah declined 0.5 per cent to 9,110, according to data compiled by Bloomberg. The won may fall to around 955 in a week, Takashima said.

Korea's currency fell for a second day as stock exchange data showed overseas fund managers sold more of the nation's equities than they bought. New Finance Minister Kang Man Soo said on February 29 the economy was facing the worst external and internal conditions in a decade.

The rupiah slid to near a one-week low as the MSCI Asia Pacific Index of the region's shares dropped 3.2 per cent before US economic reports this week that may show companies hired fewer workers and manufacturing contracted.

Stock 'Tumble'
"We see some risk aversion following the tumble in US and Asian stocks,'' said Rio Lanasier, a currency trader at PT Bank Chinatrust Indonesia in Jakarta. "The rupiah is sensitive'' to changes in share prices.

The Philippine peso had the biggest decline in almost six weeks on concern a slowing US economy will slow the inflow of remittances. The US is the Philippines' largest trading partner and the source of half its remittances, which last year helped the peso advance almost 19 per cent against the dollar.

"When the world's biggest trading partner is suddenly threatened, everyone wants to be cautious,'' said Roland Avante, treasurer at Chinatrust (Philippines) Commercial Bank in Manila. "The peso is under pressure as data suggests the US may be in a recession.''

The currency weakened 0.7 per cent to 40.745 a dollar, according to the Bankers Association of the Philippines. Nine of Asia's 10 most active currencies outside Japan fell today.

The Taiwan dollar lost 0.5 per cent to NT$31.102, according to Taipei Forex. The Singapore dollar fell 0.1 per cent to S$1.3945 and Malaysia's ringgit declined 0.1 per cent to 3.1985.

'Dramatic'
"The market is beginning to accept that a US recession will be dramatic and will hurt exports from Asia,'' said Pong Teng Siew, head of research at MIMB Investment Bank in Kuala Lumpur. "There's unwinding of positions in the ringgit and some regional currencies'' due to risk aversion.

Thailand's baht trimmed some of the gains it made last week when the central bank removed restrictions on capital entering the country. The baht had its biggest advance in at least a year on February 29 after the Bank of Thailand said it will abolish the curbs effective today to spur economic growth.

The baht fell 0.1 per cent to 31.60 onshore, while it declined 2.4 per cent offshore to 31.58.

"What is clear is that the two rates will narrow and have narrowed,'' said Usara Wilaipich, an economist at Standard Chartered Bank in Bangkok.

Elsewhere, the Vietnamese dong was little changed from last week at 15,931 a dollar.