Asian Currencies Have First Weekly Loss in 2012 on Greece Bailout Concerns

Asian currencies had this year’s first weekly loss after European leaders held back a bailout package for Greece, sapping demand for emerging-market assets.

JPMorgan Asia Dollar Index (ADXY) fell 0.5 percent this week, led by the Indian rupee’s biggest drop since December, as data showed Chinese and Philippine exports shrank while Malaysian shipments rose at the slowest pace in seven months. Greece must pass its latest austerity package into law before European leaders endorse 130 billion euros ($173 billion) of aid, Luxembourg Prime Minister Jean-Claude Juncker said Feb. 9.

“Concern is growing the Greece problem won’t be resolved easily, including whether the politicians can agree on the austerity measures,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “It’s making people risk-averse again and there are opportunities for taking profits.”

The rupee fell 1.5 percent this week to 49.41 per dollar in Mumbai. The ringgit lost 0.9 percent to 3.0363, Indonesia’s rupiah depreciated 0.6 percent to 9,031 and South Korea’s won weakened 0.5 percent lower at 1,123.73.

Greek Finance Minister Evangelos Venizelos pressed domestic political leaders to yield to conditions for the bailout, saying failure could pave the way for the country’s exit from the euro. Euro-area leaders refused to approve a second rescue package Feb. 9 because the Greek government fell short of austerity demands, he said.

Malaysia’s ringgit snapped a five-week rally, retreating from a five-month high, after a government report on Feb. 9 showed exports climbed 6.1 percent in December, the slowest since May. A central bank report on Feb. 15 may show economic growth cooled to 4.8 percent in the final quarter of 2011 from 5.8 percent in the preceding three months.

The won declined the most in a month yesterday after the central bank kept its seven-day repurchase rate at 3.25 percent on Feb. 9, unchanged for an eighth straight month, saying the economy was in “a difficult situation.”

“Investors are refraining from selling the dollar as there isn’t much momentum for the won to strengthen further,” said Cho Young Bok, a Seoul-based currency dealer at Daegu Bank.

The rupiah fell for a second day yesterday. Bank Indonesia unexpectedly cut its reference rate to 5.75 percent from 6 percent on Feb. 9, citing the need for stimulus to sustain economic growth.

The Philippine peso fell 0.7 percent yesterday to 42.49 per dollar in Manila, reducing its weekly gain to 0.3 percent. A government report yesterday showed overseas shipments contracted 20.7 percent in December, extending a slump since April.

China’s yuan climbed 0.07 percent to 6.2986 for the week, after touching an 18-year high of 6.2884 yesterday. The People’s Bank of China fixed the reference rate at a record 6.2937 per dollar, before Vice President Xi Jinping visits Washington next week.

“They are trying to defuse criticism from Washington ahead of Xi’s visit,” said Brian Jackson, an emerging-market strategist at Royal Bank of Canada in Hong Kong. While the yuan will appreciate this year, the pace may be restrained by weaker external outlook, he said.

Elsewhere, Taiwan’s dollar fell 0.1 percent this week to NT$29.56 and the Thai baht was little changed at 30.85 versus the U.S. currency. Vietnam’s dong climbed 0.5 percent to 20,868.