ASEAN KEY DESTINATIONS
Currencies slump as investors shun emerging-market assets
The Indonesian rupiah and Philippine peso declined more than 1 percent as all 10 most-active Asian currencies weakened against the dollar. Bear Stearns & Cos. yesterday halted redemptions from a third hedge fund. Macquarie Bank Ltd., Australia's largest securities firm, said investors in two of its high-yield funds may lose 25% of their money.
``There's overflow from the U.S. markets and we're seeing risk aversion and a flight to quality,'' said Steve Rowles, an analyst at CFC Seymour Ltd. in Hong Kong. ``Whilst we don't think this is going to be a momentous change, some countries are going to get hit today.''
The rupiah dropped 1.3% to 9,333 per dollar as of 2pm in Jakarta, the weakest in more than a year. The Philippine peso slipped 1.2% to 45.855 and the Singapore dollar declined 0.7% to S$1.5225, the lowest in a month.
Asia Genesis Management, a hedge fund based in Singapore that manages about $450 million, said it has shifted 95% of its holdings into cash to avoid losses. Macquarie Fortress Investments Ltd. was forced to sell assets and use the proceeds to reduce borrowings and comply with lending covenants, it said in a statement on July 31.
``The sentiment is going to afflict regional currencies for a while,'' said Saifuddin Morat, an economist in Kuala Lumpur at Aseambankers Bhd., a unit of Malaysia's biggest lender. ``It's not a good time yet to re-enter emerging markets.''
Benchmark equity indexes in South Korea, Singapore and Taiwan fell as much as 4 percent while the Morgan Stanley Capital International Asia Pacific Index of regional shares dropped 2.8%.
Indonesia's government isn't worried about the decline in the rupiah because the Southeast Asian nation's economy is accelerating and will attract investors, Finance Minister Sri Mulyani Indrawati said today.
Japan's Finance Minister Koji Omi said he plans to have frank discussions about currencies at the meeting of finance ministers from the 21-member Asia Pacific Economic Cooperation group in Australia starting today.
South Korea's won is still near the strongest since the Asian financial crisis a decade ago. A report last week showed the economy grew at the fastest pace in 18 months and Moody's Investors Service upgraded the nation's debt rating.
Korea's Finance Minister Kwon Okyu told CNBC the currency's appreciation has affected the economy.
``We are ready to take any action if there is a speculative attack on the currency,'' Kwon told CNBC from Sydney today. ``The currency has appreciated more than 40% since 2002, so it has affected the Korean economy.''
The won reversed all of this week's gains, falling 0.6% to 925.20 per dollar, the biggest decline in more than two months.
Elsewhere, the Thai baht was little changed onshore at 33.8 per dollar and the Taiwan dollar weakened 0.3% to NT$32.888. The Malaysian ringgit declined 0.5% to 3.4730. Bloomberg