The Singapore dollar slipped
on Friday after data showing a surprise contraction in the
economy in the second quarter, while other emerging Asian also
weakened a tad to extend losses for the week due to worries over
a slowdown in major economies.
Regional currencies soon recovered from initial declines
registered after China reported it weakest GDP growth figure in
more than three years, as the 7.6 percent growth in the second
quarter was in line with expectations and traders who had bet on
a weaker number quickly covered short positions.
Fears of a slowdown in the global economy, and euro zone
debt problems have dampened sentiment among Emerging Asian
currencies, whose economies are largely export driven, dealers
and analysts said.
The region continues to be buffetted by ill-winds from the
euro-zone. Moody's Investors Service surprised markets by
downgrading Italy's government bond rating by two notches to
Baa2 and warned it could cut further.
Emmanuel Ng, foreign exchange strategist at OCBC Bank in
Singapore, expected more negative shocks from the global
economy, but expected them to be tempered by hopes that the U.S.
Federal Reserve and Bank of Japan may ease monetary conditions
further.
Ng said he expect further bouts of risk aversion in the
third quarter, that would check any strength in Asian
currencies.
The sense of gloom worsened following Singapore data showing
its economy shrank 1.1 percent, on an annualised seasonally
adjusted basis, in the second quarter from the previous three
months, missing a Reuters poll forecast for 0.3 percent growth.
Though the data pushed down the Singapore dollar,
buying by hedge funds limited its decline, dealers said.
South Korea's central bank also lowered this year's economic
growth and inflation forecasts, supporting expectations of a
further rate cut after the bank on Thursday announced its first
cut in more than three years, surprising the market.
The reduction in the base rate by 25 basis points to 3.0
percent put the won on course to be the worst
performing emerging Asian currency this week.
The South Korean unit has lost 1.3 percent against the
dollar so far this week, according to Thomson Reuters data.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0230 GMT
Japan yen 79.33 79.29 -0.05
Sing dlr 1.2708 1.2689 -0.15
Taiwan dlr 29.993 30.013 +0.07
Korean won 1152.30 1151.50 -0.07
Baht 31.77 31.81 +0.13
Peso 42.10 42.08 -0.04
Rupiah 9470.00 9440.00 -0.32
Rupee 55.93 55.93 +0.00
Ringgit 3.1910 3.1900 -0.03
Yuan 6.3771 6.3733 -0.06
Change so far in 2012
Currency Latest bid End prev year Pct Move
Japan yen 79.33 76.92 -3.04
Sing dlr 1.2708 1.2969 +2.05
Taiwan dlr 29.993 30.290 +0.99
Korean won 1152.30 1151.80 -0.04
Baht 31.77 31.55 -0.69
Peso 42.10 43.84 +4.15
Rupiah 9470.00 9060.00 -4.33
Rupee 55.93 53.08 -5.10
Ringgit 3.1910 3.1685 -0.71
Yuan 6.3771 6.2940 -1.30
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