Asia Currencies Set for Weekly Loss as Stocks Falter on Economy

Asian currencies were headed for a weekly drop, led by South Korea’s won, as a rally in stocks faltered on signs the global recession is far from easing. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, fell this week for the first time in a month and the MSCI Asia Pacific Index of shares snapped a two-week rally. Unemployment-insurance claims filed by Americans last week rose more than estimates, while state-run Korea Development Institute forecast yesterday that its economy will shrink 2.3 percent in 2009, the first contraction in more than a decade.

The won, Asia’s best-performing currency in the past month, declined 0.9 percent this week to 1,258.05 per dollar as of 11:45 a.m. in Seoul, according to data compiled by Bloomberg. The Philippine peso weakened 0.9 percent to 47.68, while the Malaysian ringgit fell 0.7 percent to 3.5427.Initial U.S. jobless claims rose by 32,000 to 637,000 in the week ended May 9, the Labor Department said yesterday, 27,000 more than estimated in a Bloomberg survey of economists. The bankruptcy of Chrysler LLC and the potential for a similar collapse of General Motors Corp. may cause further job losses, threatening to delay the economy’s recovery from the deepest recession in half a century.

‘Pretty Bloody’
A government report in Indonesia may today show Southeast Asia’s biggest economy expanded 4.3 percent last quarter, the slowest pace in five years, according to a Bloomberg survey. Singapore’s economy shrank the most since at least 1975 in the same quarter and Thailand’s Finance Minister Korn Chatikavanij estimates a “pretty bloody” GDP contraction of as much as 6 percent in the same period. The yen was poised for its best week against the dollar in five months, trading at 95.94, versus 98.47 in New York on May 8. Japan’s currency also posted a weekly gain against the euro, trading at 130.76, compared with 134.23. The peso ended a two-week rally on speculation oil companies are purchasing dollars to pay for imports. The currency has declined 1.5 percent since touching a three-month high reached on May 11 after the tax bureau said revenue fell short of target in April, spurring concern that the government will fail to narrow its budget deficit.

Taiwan Dollar
Taiwan’s dollar was set for a fourth winning week on speculation warming relations with China will draw investment and help pull the economy out of a recession. The currency’s gains were tempered as global funds sold $1 billion more local shares than they bought this week as of yesterday. The benchmark Taiex index of stocks fell 1.2 percent this week, ending a three-week rally. The island’s dollar rose 0.5 percent this week to NT$32.891 against the U.S. currency, according to Taipei Forex Inc. It touched NT$32.767 on May 13, the strongest level since Dec. 31.

Elsewhere, the Indonesian rupiah declined 0.4 percent this week to 10,410 a dollar, while Thailand’s baht jumped 1 percent to 34.53. China’s yuan traded at 6.8247 versus 6.8218 on May 8, while Singapore’s dollar was at S$1.4649, compared with S$1.4659.