Asia Currencies Drop to Six-Month Low on Europe Debt Woes

Asian currencies weakened, with South Korea’s won and Malaysia’s ringgit reaching 2011 lows, on concern Europe’s worsening debt crisis will spur an exodus from emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index fell to a six- month low after Italy’s credit rating was cut one level to A by Standard & Poor’s. Taiwan said today export orders, an indication of shipments in the next one to three months, gained less than economists estimated, while a report this week may show Thailand’s overseas sales increased by less than the previous month, according to economists surveyed by Bloomberg.

The won dropped 1 percent to 1,148.90 per dollar as of 3 p.m. in Seoul, according to data compiled by Bloomberg. India’s rupee fell 0.5 percent to 48.065 and Taiwan’s dollar dropped 0.4 percent to NT$29.888.

“Risk aversion has gone to the next level and the losses are justified given that European officials have not been able to reassure the markets on the default risk,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “Asian assets are getting sold off in favor of cash.”

The Asian Development Bank cut its 2011 growth forecast for Asia excluding Japan to 7.5 percent from an April estimate of 7.8 percent, according to a report issued on Sept. 14. Global funds sold $2.9 billion more Indonesian, South Korean and Taiwanese equities than they bought this month through yesterday, exchange data show.