Most emerging Asian currencies fell on Wednesday as concerns over slowing global growth hurt risk assets, including regional stocks. The South Korean won fell as the country announced measures to aid local exporters affected by a weaker yen. Indonesia's rupiah hit its weakest in more than eight months as local shares underperformed regional peers. The Singapore dollar eased on selling from hedge funds.
Asia-Pacific shares outside Japan lost nearly 1 percent on worries about a waning global economy. The International Monetary Fund on Tuesday cut its world growth forecast to 3.3 percent this year from 3.4 percent. German Industrial output suffered the biggest decline since the height of the 2008-2009 financial crisis. "All the headlines currently are not risk friendly," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
Among regional currencies, the won and the Singapore dollar may underperform other units due to possible dovish monetary policy stances of the countries' central banks, he said. "Divergent performance on contrasting monetary paths is likely to be the key theme," Ji said, adding that the bank had short won positions against the Indian rupee and looked to sell the Singapore dollar against the Malaysian ringgit.
The Bank of Korea is expected to cut interest rates, while the Monetary Authority of Singapore may sound dovish even though it is likely to maintain its current stance next week, he said. The won fell against the dollar as offshore funds unloaded the currency and foreign investors continued to sell stocks. South Korea's government will work to cut costs of insurance on exchange-rate volatility for the roughly 4,000 small-to-medium-sized companies directly affected by the yen's moves. Against the yen, the won earlier slid to 9.9239, its softest since August 19.
The South Korean currency is seen weakening to 9.9540, the 61.8 percent retracement of its appreciation between August and September, analysts said. The rupiah fell as much as 0.4 percent to 12,248 per dollar, its weakest since February 3, as Jakarta shares lost 1.0 percent. The central bank was suspected of buying the rupiah around 12,250 to support it, traders said. The currency broadly weakened in non-deliverable forwards markets.
The official Jakarta Interbank Spot Dollar Rate (JISDOR), which the central bank launched last year in an effort to manage exchange rate fluctuations, was fixed at 12,241 rupiah per dollar, weaker than the previous session's 12,190. The rupiah ignored Bank Indonesia's decision to keep interest rates unchanged on Tuesday, as that was widely expected. The Singapore dollar eased on selling from leveraged funds amid concerns over slower economic growth in the city-state. Singapore will announce the central bank's semi-annual monetary policy decision on October 14. Most economists expect the Monetary Authority of Singapore to maintain its policy of allowing a "modest and gradual" appreciation of the Singapore dollar to guard against inflationary pressures.
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