Ukraine crisis hurts Asian currencies; rupiah pares gains after weak trade data

A man walks past at an electronic board displaying various countries' stock market indices outside a brokerage in Tokyo on March 3, 2014. -- PHOTO: REUTERS
A man walks past at an electronic board displaying various countries' stock market indices outside a brokerage in Tokyo on March 3, 2014. -- PHOTO: REUTERS

SINGAPORE (Reuters) - The South Korean won led losses among emerging Asian currencies on Monday as the crisis in Ukraine dented appetite for risky assets, while the Indonesian rupiah pared gains after a unexpected trade deficit.

Offshore funds sold the won, with Asian shares and US stock futures also pulling back amid the escalating geopolitical tensions.

Ukraine mobilised for war on Sunday and Washington threatened to isolate Russia economically after President Vladimir Putin declared he had the right to invade his neighbour.

In a further blow to risk assets, a government survey on Saturday showed activity in China's factory sector slowed to an 8-month low in February.

"Ukraine and China gave investors more reasons to take profits from Asia FX," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.

"Those issues may last longer for the time being and hurt risky assets including emerging market currencies," Park added.

Most emerging Asian currencies rose in March on some signs of stabilisation in the United States economy.

The rupiah pared earlier gains after Indonesia posted an unexpected trade deficit in January.

The nation reported a US$440 million (S$557 million) shortfall in January due to the impact of an export mineral ban and seasonal factors, government data showed, confounding market expectations for a small surplus.

Ahead of the data, the rupiah had risen as much as 0.5 per cent to 11,550 per dollar, its strongest since Nov 15, supported by offshore funds inflows.

The won eased as offshore funds sold the currency on signs of weakening economic momentum. Manufacturing activity contracted in February for the first time in five months, while exports growth was weaker than expected last month.

The peso weakened as local interbank speculators sold the currency amid the intensifying crisis in Ukraine, traders said. The Philippine currency pared some of its earlier losses on remittance inflows from overseas Filipino workers.

Traders were still looking for opportunities to sell the peso on rallies as the tensions in the Ukraine tempered risk appetite.

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