Concerns of funds exit whip Asian currencies

Asian currencies have posted a weekly loss, led by the Philippine peso and Indonesia's rupiah, on concern a slump in stock prices will prompt investors to withdraw funds from the region.

Twelve of the 15 most-actively traded Asia-Pacific currencies weakened in the five-day period on speculation overseas investors will reduce their holdings of riskier assets. The rupiah fell by the most last week since Jan. 12, sending the currency to the lowest in more than four months, and the peso had its worst week since May, Bloomberg News said.

"Investors seem to become more risk-averse because of the stock market sell-off this (last) week," said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co. "Currencies with higher yields and in the emerging markets are under pressure to weaken."

The peso this week dropped 1.2 percent to 48.725 against the U.S. dollar, while the rupiah weakened one percent to 9,180, according to data compiled by Bloomberg. The rupiah may fall to 9,200 in a few days, Soma said.

The Philippine Stock Exchange Index lost 7.4 percent in five days, including the biggest one-day decline in nine years on Feb. 28. In Indonesia, the benchmark Jakarta Composite Index of equities slumped 1.8 percent in the five-day period, the biggest loss since Feb. 9.

Indonesia's inflation rate was unchanged in February, defying expectations of an increase, prompting speculation the Bank Indonesia, the central bank, will cut rather than keep borrowing costs on hold this week.

2007-03-05