Most Asian currencies fall

Most Asian currencies fell on Tuesday as concerns over credit markets raised fears of a deeper US economic downturn, although both stocks and currencies pared losses during the day in anticipation of a Fed rate cut.
The South Korean won and Indonesian rupiah initially fell more than 1 percent each, but both recovered slightly later in the session as the stock market in Korea rebounded, led by automobile shares, and the equity market in Indonesia pared some losses.
"Generally, the currencies in Asia are stock-market driven and, despite last night's sell-off, most of the Asian stock markets are in the positive," said Philip Wee, senior strategist at DBS Bank in Singapore. However, he said he was wary of risks from the US economy spilling over in Asia in the near term.
Trading began cautiously on Tuesday as fears of deeper credit deterioration in the United States outweighed expectations that US interest rates will be cut again and so add to Asia's yield advantage. Market sentiment was also still hurting from Monday's rumours of a cash shortage at brokerage Bear Stearns, which the bank denied.
But a view that selling this week had been overdone and growing expectations of a US rate cut, with some even expecting one before a scheduled meeting next Tuesday, propped up the dollar and other Asian assets. MSCI's measure of Asia Pacific stocks excluding Japan recovered from 7-week lows to be up almost half a percent.
The South Korean won fell as far as 980.5 per dollar, its lowest since late March 2006, as foreign investors sold local stocks on concerns that a downturn in the US economy will hit the export-dependent economy.
The currency later recovered and ended local trading at 969.90 per dollar, 0.5 percent down from its previous close, as the stock market rose by 1 percent on speculation of an emergency US rate cut. An official at the country's central bank suggested the won's drop was excessive, but declined to comment when asked if the central bank was planning to intervene.
Analysts said the heavy selling of Korean equities by foreigners and high global oil prices, which hit a record above $108 a barrel on Monday, were working against the won. The Indonesian rupiah initially fell to a 1-month low at 9,275, down 1.4 percent from its previous close, but recovered slightly to 9,200 per dollar.
The Taiwan dollar once again bucked the regional trend. It rose 0.3 percent to an 8-year high of 30.5660 per dollar on expectations of a more investor-friendly environment after presidential elections on March 22.
The Malaysian ringgit initially extended losses from its previous session, falling to 3.2180 per dollar, but like other Asian currencies it later pared losses to stand 0.1 percent higher on the day. Malaysia's currency and stock markets have fallen this week after elections at the weekend resulted in the ruling coalition's biggest setback in its history.