By Lilian Karunungan
Oct. 28 (Bloomberg) -- Malaysia?s ringgit led a decline in Asian currencies on speculation the Federal Reserve will pump less money into its economy, reducing the amount of funds that can be invested in higher-yielding assets.
The ringgit weakened 0.1 percent to 3.1105 as of 10:36 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The rupiah dropped 0.1 percent to 8,938 and the Chinese yuan fell 0.1 percent to 6.6897. The U.S. central bank will purchase less debt through a plan to be unveiled next week than the $2 trillion program it embarked upon during the financial crisis, according to the Wall Street Journal.
?I don?t think the Fed is going to print as much money as the first quantitative easing,? said Godwin Chan, a foreign- exchange trader at OSK Investment Bank Bhd. in Kuala Lumpur. ?The market is too much ahead of itself. Asian currencies will be sold off.?
Estimates for the size of the asset-purchase program range from $1 trillion at Bank of America-Merrill Lynch to $2 trillion at Goldman Sachs Group Inc., with economists at both firms agreeing the Fed will likely start by announcing $500 billion after its Nov. 2-3 meeting. The Federal Reserve asked bond dealers and investors for projections of central-bank asset purchases over the next six months, according to a New York Fed survey obtained by Bloomberg News.
Malaysia?s currency lost 0.3 percent yesterday, the most in a week, after Governor Zeti Akhtar Aziz said the central bank doesn?t want sudden movements in the exchange rate and favors a gradual strengthening of the ringgit. The currency has gained 10 percent this year, the second-best performance in Asia excluding Japan.
?Fundamental Level?
The rupiah slid to its lowest level in a month after Bank Indonesia Governor Governor Darmin Nasution said yesterday the rupiah?s ?fundamental? level is between 8,900 and 9,300 against the dollar. The central bank will ?guard? the rupiah at its fundamental level and buy foreign currencies to curb volatility, he said.
South Korea?s won halted a two-day decline after a central bank report showed the nation?s current-account surplus widened to $4.06 billion in September from a revised $2.19 billion in August.
?The current-account surplus is a positive factor for the currency,? said Yun Se Min, a currency trader at Busan Bank in Seoul. ?But the overall trend globally is profit-taking by releasing emerging-market assets and buying back the dollar.?
Elsewhere, Taiwan?s dollar climbed 0.8 percent to NT$30.656, the Singapore dollar gained 0.1 percent to S$1.3003 and the Philippine peso rose 0.1 percent to 43.213. The Thai baht was little changed at 29.98.
--Editors: Ven Ram, Simon Harvey
%VND %KRW %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
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