Investors Sell Stocks, Peso Drops

From Bloomberg, concerns on Fed rate cuts spurs investors to sell off stocks, forces peso to fall.

"Asian currencies fell, led by the Philippine peso and the South Korean won, as concern the Federal Reserve will cut interest rates less than expected prompted investors to sell emerging-market equities.

All of the 10 most actively-traded currencies in Asia outside Japan dropped today as stocks slumped on concern faster inflation will slow consumer spending in the region's biggest export market. Foreign investors were net sellers of shares in South Korea, Taiwan and the Philippines, according to data from stock exchanges.

``The dollar is strengthening across the board,'' said Hideki Hayashi, a foreign-exchange strategist at Shinko Securities Co. in Tokyo. ``In addition, regional stocks slumped, leading to speculation investors will dump Asian equities.''

The Philippine peso plunged 1.1 percent to 41.655 at the 4 p.m. close of onshore trading, according to Philippine Dealing & Exchange Corp. South Korea's won closed at the lowest since Sept. 11, down 0.4 percent to 933.60, according to Seoul Money Brokerage Services Ltd.

The won may trade between 930 and 935 this week, Hayashi said.

Interest-rate futures on the Chicago Board of Trade show 80 percent odds policy makers will lower the target overnight lending rate between banks a quarter-point to 4 percent in January, compared with 96 percent chances a week ago.

``Given potential inflation, the Fed will probably cut less,'' said Jonathan Ravelas, market strategist at BDO Unibank in Manila. ``There will be some correction for emerging market currencies including the Philippines.''"