Peso drops on subprime woes

ASIAN CURRENCIES ROUND-UP

Asian currencies declined on speculation losses from US subprime mortgages are leading global investors to cut holdings in emerging-market assets.

Philippine central bank Governor Amando Tetangco said the peso is ``best left to market forces'' as it fell 0.4 per cent. Overseas investors in South Korea sold more stocks than they bought today, pushing the won to a two-month low.

Shares in the region also fell as US, Australian and Canadian companies said they were hurt by credit-market losses.

``We're seeing risk aversion hit some currencies and there may be more to go,'' said Magnus Prim, a senior foreign-exchange strategist at Skandinaviska Enskilda Banken in Singapore. ``The subprime woes aren't over, even though the fundamentals still seem pretty solid.''

The won declined as much as 0.4 per cent to 932.90 per dollar and closed at 932.50 as of 3 p.m., according to Seoul Money Brokerage Services Ltd. It was last weaker on May 25. The peso fell 0.4 per cent to 45.835 per dollar.

Sydney-based RAMS Home Loans Group Ltd. said a shakeout in global debt markets may cut its earnings. US subprime lender Aegis Mortgage Corp. filed for bankruptcy yesterday and Canadian financial-services company Coventree Inc said it failed to sell asset-backed commercial paper.

``Investors are still worried about the US subprime mortgage problem,'' said Edi Rahardjo, a currency dealer at PT Bank Maybank Indocorp in Jakarta. ``The rupiah would have risen otherwise.''

The rupiah, Asia's worst-performing currency this year among the 10 most-active, weakened 0.2 per cent to 9,360. The Malaysian ringgit slipped 0.1 per cent to 3.4775.

Malaysia's central bank said yesterday that the financial system has ``sufficient'' liquidity and is able to withstand shocks that may arise from subprime mortgages.

Stock indexes in the Philippines, Indonesia, Thailand and South Korea fell today. Overseas investors were net sellers of shares in Taiwan and the Philippines yesterday and sold a net $145.5 million in South Korea today.

South Korea's Finance Minister Kwon Okyu reiterated that the yen's weakness isn't justified and carry trades based on the Japanese currency threaten global markets.

Contagion from the subprime rout on South Korea's markets is ``low,'' Vice Finance Minister Kim Seok Dong said yesterday, adding that the government will provide cash in case of a credit crunch.

Elsewhere, the Vietnam dong was little changed at 16,207. Taiwan's dollar held at NT$32.968 per dollar. The chances of the island's central bank increasing rates at its board meeting next month ``are slim,'' the Taipei-based Commercial Times said yesterday, citing unidentified executives at commercial lenders.