Currencies decline on funds pullout fears

ASIAN CURRENCIES ROUND-UP

Asian currencies declined on signs that investors are cutting risk and exiting emerging markets on concern the US economy, the world's biggest, may be slowing.

The South Korean won fell as global funds sold more shares than they bought and the Kospi index slumped the most in three weeks. The Malaysian ringgit set a three-week low as the number of US jobs unexpectedly dropped for the first time since 2003.

"Asian currencies are going to weaken,'' said Leslie Khoo, an economist at Forecast Ltd. in Singapore. "It's all because of the bad jobs data in the U.S. and that's causing rising risk aversion.''

The won weakened to 939.10 per dollar as of 3 p.m., the close of onshore trading, according to Seoul Money Brokerage Services Ltd. The ringgit slipped 0.3 percent to 3.5142.

The US payrolls report Sept. 7 showed jobs fell by 4,000 last month, sending yields on two-year Treasury notes to near the lowest since September 2005 and the Morgan Stanley Capital International Asia-Pacific Index, a benchmark for the region's shares, 1.7 per cent lower. The median forecast of 88 economists surveyed by Bloomberg News was for a gain of 100,000 jobs.

Bank of Korea Governor Lee Seong Tae said September 7 he is monitoring how global market turmoil will affect the domestic economy.

Central Bank Governor Tarisa Watanagase said last week she is ``keeping a close watch'' on the US subprime-mortgage crisis, adding the Bank of Thailand will ``intervene'' in the currency market to stem baht volatility.

Malaysia may consider measures to counter any effect from a potential slowdown in the US economy, Second Finance Minister Nor Mohamed Yakcop said today. The government said on September 8, the US housing crisis forced it last week to give a lower 2008 economic growth forecast than it initially had anticipated.

The baht bucked the regional trend to gain 0.2 per cent to 34.20 per dollar in onshore trading. Thai Finance Minister Chalongphob Sussangkarn on September 7 said the government will boost economic expansion this year with public spending as a slowdown in export growth is "expected.''

The Philippine peso fell 0.4 per cent to 46.695 on concern exports to the US, its largest overseas market, will slow.

"Demand for our exports could weaken as the US economy slows,'' said Marcelo Ayes, senior treasury vice-president at Rizal Commercial Banking Corp. in Manila. "By correlation, that is what is driving the peso down.''

Central bank Governor Amando Tetangco said today that inflation will average less than 4 percent this year. Inflation averaged 2.6 per cent in the first eight months, below the bank's 4 per cent to 5 per cent target range.

Elsewhere, the Vietnam dong was little changed at 16,241 and the Singapore dollar gained 0.1 per cent to $1.5234.