Asian currencies fall on economic fears, baht at 1-year low

Reuters

Posted at Feb 26 2009 02:32 PM | Updated as of Feb 26 2009 10:32 PM

SINGAPORE - Asian currencies fell against a stronger US dollar on Thursday as investors turned more risk averse amid concerns about the global economic outlook, with the Thai baht hitting a one-year low.

The baht lost 0.6 percent to 35.98 per dollar, but traders said they spotted no fresh intervention by the central bank, which has been suspected of buying dollars in the market to push down the baht to help local exporters.

"I think the dollar/baht could break above 36 by the month-end," said a trader in Singapore.

The baht is holding up relatively well amid the global turmoil, falling 3 percent so far this year compared to a 17 percent slide in the South Korean won and an almost 9 percent fall in the Indonesian rupiah.

The Singapore dollar shed a third of a percent to 1.5349 per US dollar, a one-week low.

"I reckon we see the top topside for US dollar/Singapore dollar towards 1.5380 in the near term," said a trader.

Singapore's January factory output fell a seasonally adjusted 4.4 percent from December, data showed on Thursday, the latest sign that the economy is sinking deeper into recession.

Asian stocks pared early gains and turned negative, reflecting persistent concerns about the global economy.

The Japanese yen tumbled to a three-month low against the dollar as worries grew about Japan's economic outlook.

Meanwhile, the Malaysian ringgit fell a quarter of a percent to 3.6755 per dollar, bringing its losss so far this year to 6 percent.

Analysts at UBS said they believe Malaysia's central bank, which has in recent months sold dollars aggressively to support the ringgit, may allow the ringgit to fall as exports tumble.

"We expect dollar/ringgit to retest the 3.8000 psychological level where the pair was pegged during the Asian crisis again in the second quarter," they said in a note.

Investors are awaiting US President Barack Obama's first budget proposal, due to be sent to the US Congress later on Thursday, to see what support it will give to the economy.

Elsewhere, the Chinese yuan eased slightly to 6.8394 per dollar as the central bank guided the tightly-held unit lower in line with other Asian currencies.

Dollar/yuan non-deliverable forwards rose, with one-year NDFs hitting 6.9627, implying a 1.8 percent fall from the spot, after the central bank set the yuan daily mid-point, or pre-trading fixing, at 6.8371 -- the third straight weaker rate.

"The market has been trying to sell dollar/yuan in NDFs in the last few days, but the dollar/yuan fixing keep going slightly higher day by day, and dollar/Asians have all gone higher," said a trader in Singapore.