EMERGING CURRENCIES
Thai baht falls, peso slips to 1-wk low
By Kevin Yao
Reuters
First Posted 17:14:00 12/02/2008
Filed Under: Bangkok Crisis, Economy and Business and Finance, world financial crisis, Foreign Exchange Markets, Emerging Markets Debt
SINGAPORE -- The South Korean won led a broad decline in Asian currencies on Tuesday amid heightened investor fears of a global recession, while the Thailand's political crisis drove the baht to its lowest level in almost two years.
The South Korean won fell as far as 1,482.9 per dollar, down almost 2.9 percent from Monday's domestic close but later cut losses as dealers cited dollar-selling intervention by the authorities.
The won, the worst performing currency in Asia, has lost a staggering 36 percent against the dollar so far this year due to capital outflows and slowing exports, even though analysts believe the worst may be over.
The Philippine peso lost 1.0 percent to a one-week low 49.51 per dollar as risk aversion rose following a slide in US stocks.
"The peso is led by the equity move last night," says a trader in Manila. Two traders said the central bank might have sold dollars at 49.5 to support the peso.
The MSCI index of Asia-Pacific stocks outside Japan was down 4.6 at 0726 GMT, taking its cue from a 7.7-percent slide in the Dow Jones industrial average on Monday.
The baht briefly fell to 35.83 per dollar -- its weakest since February 2007 -- but it later edged up to 35.62 after the ruling People Power Party was ordered to disband because of vote fraud.
"Some people pushed the dollar/baht pair down because they might think that domestic unrest is going to be resolved," said a trader in Bangkok.
The Constitutional Court ordered that the People Power Party and another coalition party be disbanded after they were found guilty of vote fraud.
The Indian rupee slipped as low as 50.54 per dollar, moving towards its record low of 50.57 hit on Nov. 20, as fears of sharp foreign fund outflows to intensify after the recent militant attacks in the financial hub Mumbai.
Meanwhile, the Chinese yuan fell a third of a percent to 6.8870 per dollar, its weakest level since June 17, amid speculation that the authorities would push down the yuan, albeit moderately, to help spur exports.
The yuan, which has been kept within a thin range since July, posted a record one-day loss of 0.7 percent.
"There are indications that the Chinese are moving towards a more accommodative policy on the yuan as global markets continue their inexorable slowdown," Dwyfor Evans, currency strategist at State Street Global Markets, said in a note.
ING had raised its one-year dollar/yuan forecast to 7.22 from 7.03, Tim Condon, head of Asia research, said in a note.
But Emmanuel Ng, a strategist at OCBC Bank, is among many analysts who still believe China would keep the yuan largely steady in the near term.
"The cons are larger than pros as the yuan depreciation may trigger the competitive devaluation across Asia and may also weigh on the domestic sentiment including the equity market sentiment and consuming desire," he said in a note.
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