Emerging Asian currencies lost ground on Monday as Greek debt worries depressed sentiment, while South Korea's won slipped to a 10-week low as gloomy exports data heightened expectations of another rate cut. Regional currencies were also hobbled by surveys on Chinese factory activity, which failed to ease anxiety on the outlook for the world's second-largest economy.
Growth in China's factory sector edged up to a six-month high in May but export demand continued to shrink, an official survey showed earlier. The won fell on growing expectations of a further rate cut and currency intervention as exports in May suffered the largest slide in nearly six years. Manufacturing activity contracted by the sharpest pace since mid-2013. The Malaysian ringgit slid to its weakest in almost seven weeks as oil prices failed to maintain Friday's rebound, underscoring concerns that lower crude may hurt the country's trade and fiscal accounts. Malaysia is a net oil exporter. The US dollar rose against a basket of major currencies with the euro down after Greece missed a self-imposed Sunday deadline for an agreement with its lenders to receive aid, keeping fears of a debt default alive.
Athens has been under intensified pressure as the debt-strapped nation faces a payment-deadline to the International Monetary Fund on June 5 and the expiration of its bailout programme on June 30. "Volatilities in Asia FX will increase until June 5. Traders may be uneasy about carrying over any positions," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul. The won lost as much as 0.6 percent to 1,114.7 per dollar, its weakest since March 23.
South Korea's exports fell 10.9 percent in May from a year earlier, the largest drop since August 2009, the government data showed earlier. The HSBC/Markit purchasing managers' index (PMI) of the country's manufacturing sector slid to a seasonally adjusted 47.8 in May, the lowest since August 2013. The dismal numbers came as the won hovered near a seven-year high against the yen, reinforcing concerns that South Korea's exporters are losing competitiveness against Japanese rivals in overseas markets. A senior South Korea's finance ministry official on Friday warned of intervention when needed to curb the won's rapid appreciation versus the yen. In early afternoon trade, the won had managed to pare some of its morning losses against the dollar as exporters chased it for settlements. The ringgit fell 0.2 percent to 3.6745 per dollar, its weakest since April 16. The Malaysian currency came under further pressure from dollar demand linked to daily fixing, traders said.
The ringgit may weaken to 3.6838, the 76.4 percent Fibonacci retracement of its appreciation from March to April as it cleared the 61.8 percent level of 3.6558, analysts said. Some traders, however, hesitated to dump the ringgit, saying bearish bets on the currency are becoming stretched. "Here is a bit too high," said a senior Malaysian bank trader when asked if he would buy the dollar against the ringgit around the current level. "It is better to buy on dips to 3.65."
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