By Aaron Pan and Lilian Karunungan
June 28 (Bloomberg) -- Asian currencies, led by South Korea's won, declined this week as overseas investors increased sales of local shares following the biggest loss in U.S. stocks in almost three weeks.
The won slumped 5.5 percent this quarter, the most since the period ended December 2000, on concern that record oil prices will slow the nation's economic growth. The MSCI Asia Pacific index of equities fell, with the benchmark heading for its worst first half since 1992. Thailand's baht dropped for a fifth week.
``There's a big tumble in stocks out there, sapping appetite for the won,'' said Jay Won, a currency dealer at Korea Exchange Bank in Seoul. ``Month-end export deals and the government's intervention may put some brake on the loss.''
The won fell 1.3 percent this week to 1,041.80 against the dollar in Seoul, according to Seoul Money Brokerage Services Ltd. The currency has declined 11.3 percent this year, the second- worst performance among the 10 most-active currencies in Asia outside Japan.
Overseas funds sold more Korean shares than they bought every day this month except for two, according to data from Korea Exchange. The nation's Kospi index of equities declined 1.9 percent, logging a fourth weekly loss. Investors dumped Thai stocks on all but two days this month through yesterday.
Thailand's baht lost 0.7 percent to 33.58 a dollar this week, Vietnam's dong fell 1.4 percent to 16,843 and Taiwan's dollar was little changed at NT$30.388. Singapore's dollar added 0.1 percent this week to S$1.3632.
`Blessing in Disguise'
Record oil prices are ``a blessing in disguise'' for Asian economies and currencies as high transport costs will coerce the region to become less reliant on exports and more on local demand, Morgan Stanley said.
Surging oil prices that are raising Asian exporters' costs to ship everything from cars to clothes to the West will encourage them to rely on domestic customers and this will help reduce global imbalances, Stephen Jen, chief currency strategist at Morgan Stanley in London, wrote in a report on June 26.
Malaysia's ringgit fell on concern that crude oil prices will spur inflation, slow growth and prompt investors to sell assets in the region.
The currency headed for its first quarterly loss since the period ended September 2006 after oil rose to a record. Malaysia raised fuel prices on June 5, the seventh increase in four years, to trim its subsidies and ease some pressure on the budget deficit.
``Oil news and the inflation theme have been causing the biggest impact on the ringgit,'' said Awaluddin Shariff, a currency trader at EON Bank Bhd. in Kuala Lumpur. ``It's been a poor quarter and people have probably closed their positions for the month by now.''
The ringgit traded at 3.2625 per dollar yesterday, versus 3.2560 a week ago, according to data compiled by Bloomberg.
The Philippine peso posted a weekly loss, dropping to the lowest level in almost nine months, after crude oil rallied to an all-time high this week. The commodity's prices in New York have more than doubled in the past year.
The Philippine trade deficit may widen to $11.5 billion this year, from $8.6 billion in 2007, due to rising oil and rice prices, central bank Director Iluminada Sicat said on June 26. click here for more: Asian Currencies Post Weekly Decline on Stock Sales, Record Oil Bloomberg - 6 hours ago