Asian currencies dropped, led by South Korea’s won, as concern Greece’s planned referendum on the European Union’s rescue plan will worsen the debt crisis damped demand for emerging-market assets.
The won fell the most in a month as the MSCI Asia-Pacific Index of regional shares declined to the lowest level since Oct. 24. The Greek vote risks a disorderly default if voters reject it and will jeopardize the next installment of 8 billion euros ($11 billion) of emergency aid funds from the European Union and the International Monetary Fund later this month. A Chinese manufacturing purchasing managers’ index fell to a 32-month low, data showed yesterday.
“The market will remain under pressure in the interim until the Greek referendum goes through” said Roy Teo, a currency strategist at ABN Amro Private Bank in Singapore. “The PMI manufacturing numbers didn’t help with the current bearish sentiment.”
The won slid 1.3 percent to 1,128.72 per dollar as of 11:27 a.m. in Seoul, according to data compiled by Bloomberg. Indonesia’s rupiah weakened 0.9 percent to 8,976 and Malaysia’s ringgit dropped 0.4 percent to 3.1400. The Philippine peso declined 0.7 percent to 42.905 from the end of last week. The nation’s financial markets were closed for holidays in the first two days of this week.
Greek Prime Minister George Papandreou said yesterday voters will give him support at the referendum to forge ahead with economic reforms. An opinion poll published Oct. 29 showed 59 percent of Greeks see the latest EU debt accord on a new bailout and debt writedown as negative or probably negative.
‘Maintain Order’
The proposal for a vote “surprised all of Europe,” French President Nicolas Sarkozy said yesterday, before leaders from the Group of 20 nations meet on Nov. 3-4 in Cannes, France. The U.S. Federal Open Market Committee is expected to maintain a near-zero benchmark interest rate after a policy meeting concludes today, according to economists surveyed by Bloomberg.
“Renewed uncertainties over Greece’s debt issues will drag the won down,” said Lee Jung Hyun, a currency dealer at Industrial Bank of Korea in Seoul. “Expectations for the G-20 summit and the FOMC meeting this week may limit currency declines.”
Taiwan’s dollar weakened for a third day as central bank Governor Perng Fai-nan pledged to “maintain order” in the exchange rate, in response to questions from lawmakers in parliament today. The currency dropped 0.3 percent to NT$30.179 against the greenback, according to Taipei Forex Inc.
Thai Flooding
Thailand’s baht was little changed near a one-week low as the worst floods in five decades disrupt factories and hurt exports. The Bank of Thailand lowered its 2011 economic growth forecast last week to 2.6 percent from 4.1 percent.
“The flood is really going to affect Thailand’s growth,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. “I’m cutting my 2011 growth forecast by as much as three percentage points.”
Elsewhere, China’s yuan climbed 0.03 percent to 6.3527 per dollar in Shanghai. The Vietnamese dong was little changed at 21,011.