Yuan falls after four-day upswing

ASIAN CURRENCIES ROUND-UP

The yuan snapped a four-day advance on speculation China's central bank is seeking to foster two-way movement in the currency to stop bets on further gains.

The People's Bank of China set the reference rate for daily trading weaker for the first time in five days today. The yuan also declined against the dollar following an overnight drop in the euro and the yen, currencies included in a basket against which the central bank manages the exchange rate.

The yuan dropped 0.22 per cent to 7.2485 per dollar as of the 5:30 p.m. close in Shanghai, according to the China Foreign Exchange Trade System. That's the sharpest decline since December 6. The yuan has gained 0.8 per cent so far this month, its best start to a year since a link to the dollar was scrapped in 2005.

The yen may rise to 95 to the dollar by the end of the year as the US economy slows and the Bank of Japan refrains from intervening, said Eisuke Sakakibara, former top currency official at the Ministry of Finance. The yen advanced to 157.09 per euro at 10:36 a.m. in London, from 157.72 late in New York yesterday, when it reached 156.29, the strongest since September 10. Japan's currency was at 107.52 per dollar compared with 107.64.

Asian currencies fell, led by South Korea's won and the Philippine peso, as foreign investors cut their stock holdings on concern US economic slowdown will cool demand for Asian exports.

The won, the biggest loser among 10 most actively traded currencies in Asia outside Japan, had its lowest close since August 21 as fund managers outside Korea sold more local shares than they bought every day bar one this year, according to data from the Korea Exchange.

Korea's won dropped 0.6 percent to 945.55 against the dollar at the 3 p.m. close of onshore trading, adding to yesterday's 0.5 percent decline, according to Seoul Money Brokerage Services Ltd.

The peso dropped to the lowest in more than a week after the Federal Reserve said economic growth in the US slowed in late November and December.

Malaysia's ringgit fell for a second day on speculation slowing global growth will prompt investors to cut holdings of the nation's assets. The currency declined to the lowest since January 7 after US stocks fell to the lowest in more than a year, extending a slide in global equities. The ringgit fell to 3.2727 per dollar, compared with 3.2685 late yesterday, according to data compiled by Bloomberg.

Thailand's baht, which rose 1.7 percent this year, was unchanged at 33.14 from yesterday in onshore trading. The central bank said it has been buying dollars to avoid excessive gains in the local currency.

Elsewhere, the Singapore dollar declined 0.1 percent to S$1.4317. The Indonesian rupiah was little changed at 9,444 and the Vietnamese dong traded at 16,005 from 15,989. The Taiwan dollar closed at NT$32.278 from NT$32.272 yesterday, according to Taipei Forex Inc.