Asian Currencies Have Weekly Drop on North Korea Attack

Asian currencies had their biggest weekly loss in six months as an exchange of artillery fire in the Korean peninsula deterred investment in the region and European demand for debt crisis driven by dollars.
, Asia Dollar Index fell for a third week, its worst run since February, after North Korea bombed a South Korean island on November 23, prompting retaliatory fire. The euro fell Wednesday to a minimum of two months in Ireland negotiated a bailout of the European Union and led by the Financial Times Deutschland reported that policy makers in the region are taking Portugal to seek financial aid.

"Asian currencies have suffered the contagion in Europe," said Dariusz Kowalczyk, chief economist at Credit Agricole CIB in Hong Kong. "We also had an escalation of tensions in North and South Korea."

The won fell 2.2 percent this week to 1,159.63 per dollar in Seoul, its biggest drop in five months. Singapore dollar fell 1.9 percent to S $ 1.3208, the biggest drop since February 2009 and the Malaysian ringgit dropped 1.5 percent to 3.1630. The Asia index of the dollar, which is the region of 10 most used currencies except the yen, fell 1.1 percent to its lowest level in two months.

The won fell 1.9 percent yesterday after North Korea, through its state news agency KCNA, said that "the confrontation escalated lead to war." The aircraft carrier USS George Washington to start doing morning exercises off the Korean peninsula with warships from the South in a show of force that the North was warned countries "closer to the brink of war."

War Risk

"This is really a great risk for the entire region, resulting in a massive sale of cattle," said Minoru Shioiri, senior manager of forex trading at Mitsubishi Tokyo UFJ Morgan Stanley Securities Co. "People do not want to keep the cattle and other currencies in the region during the weekend when we do not know what will happen. "

The ringgit had its biggest weekly decline in six months, a central bank report showed the economy slowed more than economists expected in the third quarter. Gross domestic product rose 5.3 percent from a year earlier, below the 8.9 percent gain in the last three months and the median 5.9 %

"We both economic and geopolitical events have dented investor appetite for risk", said Murezani Wan Mohamad, Malaysia's Corp. analyst rankings in Kuala Lumpur.

GDP data

The Philippine peso fell 0.9 percent to 44.195 per dollar, a third weekly decline, as a November 25 report showed GDP unexpectedly fell 0.5 percent in the third quarter of the last three months. Economists surveyed by forecast 0.9 percent growth for the period.

China's yuan fell 0.42 percent this week to 6.6675 per dollar, its biggest drop since December 2008.

"There is more risk averse after the situation of Korea and the European debt crisis," said Claudio Piron, head of emerging Asia foreign exchange and fixed income strategy at Bank of America unit of Merrill Lynch in Mexico. "If you look across the region, all Asian currencies have weakened against the dollar."

Taiwan dollar fell 0.5 percent this week to NT $ 30.83, while Indonesia's rupiah dropped 0.8 percent to 9,013. Thai baht fell 0.8 percent to 30.20.