Asian currencies fall

Asian currencies drifted lower as growing fears of the financial turmoil sparked a global rout in stocks, with the South Korean won sliding more than 3 percent. The won fell as far as 1,156.9 per dollar, nearing its four-year low at 1,165.8 hit on Tuesday, as foreign investors continued to dump local stocks amid a world-wide flight from riskier assets triggered by the US financial system turmoil.
The Philippine peso fell as low as 47.29 to the dollar as investors dumped local stocks, but it was buffered by suspected dollar-selling intervention by the central bank. "The central bank is selling dollars to support the peso, from 47.28 to 47.29 (per dollar)," said a trader in Manila.
A second trader said the central bank was trying to prevent the peso from falling below 47.30. Breaking that level would send the peso to its weakest level since May 2007. The Taiwan dollar fell to a 7-1/2-month low at 32.284 per US dollar, while the Singapore dollar lost half of a percent to 1.4365 against the US dollar.
The Indian rupee lost almost one percent to 46.79 per dollar as falling local stocks ignited fears of capital outflows. But the rupee's loss was capped by suspected official intervention. India's central bank said in a statement on Tuesday it would continue to sell dollars in the market either directly or through state-run banks to augment supply.
The won has lost nearly 19 percent against the dollar so far this year, followed by a drop of almost 16 percent in the Indian rupee and a fall of 13 percent in the Philippine peso. Global stock markets plunged after US government's $85 billion bailout of insurer American International Group failed to calm investors, with the MSCI index of Asia stocks excluding Japan falling 3.5 percent.
Shares of Morgan Stanley and larger rival Goldman Sachs plunged on Wednesday, stoking talk that the surviving investment banks may have to join up with a commercial bank to survive the intensifying credit contraction. Central banks around the world have pumped cash into money markets in response to a worsening credit squeeze as investors flee into safe havens of gold and government bonds.
The Thai baht bucked by the regional weakness, rising 0.6 percent to 34.08 per dollar, as some investors cut their long dollar positions loaded up earlier this week following the failure of US investment bank Lehman Brothers. "We see unwinding Lehman exposure, but the market is thin," said a trader in Bangkok.