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Asian currencies fell, led by Indonesia’s rupiah, as concern Europe’s debt crisis will worsen countered improved jobs data from the U.S.

The Bloomberg-JPMorgan Asia Dollar Index dropped after David Riley, London-based head of the sovereign-debt unit at Fitch Ratings, said yesterday that Italy faces a “significant chance” of a downgrade. U.S. employers took on 4.15 million workers in November, 107,000 more than the previous month, government data showed yesterday. Taiwan’s dollar rose for a seventh day on speculation President Ma Ying-jeou will be re- elected this weekend.

“It’s difficult for investors to bet on riskier assets just relying on positive economic data from the U.S.,” said Lee Jung Hyun, a Seoul-based currency trader at Industrial Bank of Korea. “There’s tension in the market regarding Europe’s debt issue.”

The rupiah declined 0.5 percent to 9,203 per dollar as of 9:13 a.m. in Jakarta, according to prices from local banks compiled by Bloomberg. Malaysia’s ringgit weakened 0.3 percent to 3.1435 and South Korea’s won fell 0.2 percent to 1,158.98.

Capital flows into Asia are expected to fluctuate more than they did in 2011 because of concerns about Europe’s debt crisis and China’s economic slowdown, Bank of Thailand Assistant Governor Pongpen Ruengvirayudh said yesterday. China’s imports rose 11.8 percent in December from a year earlier, the slowest pace in 24 months, official data showed yesterday. Korea’s December jobless rate held at a three-year low of 3.1 percent, a report showed today.

Malaysian Growth Slowing
The rupiah dropped for a third day before a central bank interest-rate review tomorrow, at which 13 of 18 economists surveyed by Bloomberg forecast the reference rate will be held at 6 percent. Five predict a quarter of a percentage point cut.

Malaysian exports rose 12.9 percent in November from a year earlier, compared with a 15.8 percent gain in October, a Bloomberg survey showed before a report due at noon. Industrial production climbed 1.8 percent in November from a year earlier, the least since July, data showed yesterday. The median estimate in a Bloomberg survey was for a 3.5 percent gain.

“Malaysia’s growth is likely to get slower,” said Enrico Tanuwidjaja, a Singapore-based senior currency analyst at Malayan Banking Bhd.

Thailand’s baht approached a 16-month low after international investors sold $57 million more local shares than they bought yesterday, according to exchange data. The central bank will scale back efforts to control the exchange rate even as it predicts volatility in the baht will rise, Pongpen said. The baht slid 0.2 percent to 31.71 per dollar, according to data compiled by Bloomberg. The currency touched 31.83 on Jan. 9, the weakest level since August 2010.

Taiwan Dollar Rallies
“For now, investors remain conservative about putting money into the riskier assets,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “There’s some optimism about the U.S. economy, but Europe’s problems haven’t been solved yet.”

Taiwan’s dollar rallied to the strongest level in more than two months ahead of the election on Jan. 14. Overseas investors bought $318 million more local equities than they sold yesterday, the biggest net inflows since Dec. 1, according to exchange data. Taiwan will vote for a new president, with Tsai Ing-wen, chairwoman of the opposition Democratic Progressive Party, contesting against Ma, who is chairman of the Kuomintang party.

The island’s dollar gained 0.4 percent to NT$29.939, according to Taipei Forex Inc. It touched NT$29.904, the strongest level since Nov. 1.

China’s yuan was little changed at 6.3153 per dollar as U.S. Treasury Secretary Timothy F. Geithner prepares to hold talks with Premier Wen Jiabao in Beijing today. The Treasury Department said in a report two weeks ago that the yuan was “substantially undervalued” and the U.S. will “press for policy changes that yield greater exchange-rate flexibility.”

Elsewhere, the Philippine peso was steady at 43.98 per against the greenback, while Singapore’s dollar shed 0.3 percent to S$1.2933.

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Taiwan’s dollar rose to the strongest level in more than two months after global funds boosted their holdings of the island’s shares on optimism President Ma Ying-jeou will get reelected on Jan. 14.

The currency advanced for a seventh day after overseas investors bought $318 million more local equities than they sold yesterday, the biggest net inflows since Dec. 1, according to exchange data. Taiwan will vote for a new president over the weekend, with Tsai Ing-Wen, chairwoman of the opposition Democratic Progressive Party, contesting against Ma, who is chairman of the Kuomintang party.

“It’s very unusual for foreign funds to come in at this time of the year as the Chinese New Year is just around the corner,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “Maybe there’s some optimism that the incumbent Kuomintang will win, and investors are looking forward to a stock rally on Monday.”

The island’s dollar strengthened 0.5 percent to NT$29.914 against its U.S. counterpart as of 9:46 a.m. local time, according to Taipei Forex Inc. It reached NT$29.904, the strongest level since Nov. 1. Financial markets will be closed for the weeklong Chinese New Year holiday starting Jan. 23.

Government bonds were little changed. The yield on the 1 percent notes due January 2017 was at 0.982 percent, compared with 0.986 percent yesterday, prices from Gretai Securities Market show.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.40 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.