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EMERGING CURRENCIES
Asia hit by renewed financial fears


Reuters
First Posted 15:12:00 02/24/2009

Filed Under: Economy and Business and Finance, World Financial Crisis, Foreign Exchange Markets, Emerging Markets Debt

SINGAPORE -- Asian currencies fell Tuesday as concerns about the health of the global financial system and growing economic gloom haunted investors.

The won fell as low as 1,514.9 per dollar, down about 1.7 percent and bringing its losses so far this year to nearly 17 percent, as investors dumped stocks locally and around the region.

The won, the hardest hit among Asian currencies by global financial turmoil, has tumbled more than 40 percent since the start of 2008 due to capital flight and weakening exports as global growth stalls and demand collapses.

The Indonesian rupiah fell 0.6 percent to 12,000 per dollar, with the loss being contained by suspected central bank intervention.

"The rupiah just follows other Asian currencies – the dollar is firmer," said a trader in Jakarta. "The central bank was selling dollars at 11,950 this morning."

But the rupiah rose 1.0 percent in one-year offshore non-deliverable forwards to 14,280 per dollar -- implying a fall of about 16 percent from the spot rate.

Traders said investors took profits from the dollar's steep gains in the NDFs since the start of 2009.

The spot rupiah is down almost 8.0 percent so far this year, the second worst performer in Asia after the won.

Asian shares fell, with the MSCI index of Asia-Pacific stocks outside Japan losing 2.3 percent as of 0525 GMT, as doubts persisted about the US government's ability to stabilize the ailing banking sector amid the global economic downturn.

US regulators on Monday reinforced their willingness to provide extra funds to financial institutions that need it, as they look to begin assessing major institutions' capital needs on Wednesday under a new "stress test" program.

Meanwhile, the Thai baht lost half a percent to 35.79 per dollar as investors sold stocks, but traders said they saw no sign of central bank dollar-buying intervention to deliberately weaken the unit.

"I haven't seen them this morning and I think the baht moves in line with other regional currencies," said a trader in Bangkok.

The central bank has been suspected of intervening in recent weeks to push down the baht to help local exporters.

The baht hit a one-year low of 35.85 on Friday.

The Singapore dollar fell a fifth of a percent to 1.5339 per US dollar but was still off its 1-1/2-year low of 1.5410 hit on Friday.

Investors are bearish on the Singapore dollar as the trade-reliant economy sinks deeper into recession, but they also fretted about possible intervention by the authorities to support the local unit.

"We expect the Singapore dollar to move in a tight range today," said a trader in Singapore.