-- Malaysia's ringgit and the Philippine peso led losses in Asian currencies on concern record oil prices will slow growth as inflation hurts consumer spending and erodes profit margins.

The Malaysian currency touched a five-month low as investors reduced holdings of local stocks and bonds last quarter on heightened political risks after Prime Minister Abdullah Ahmad Badawi rejected calls for his resignation. Six of the 10 most-active Asian currencies outside of Japan fell after crude oil traded above $140 a barrel, extending six quarters of increases. Investors also sold regional stocks, which dropped for the ninth time in 10 days.

``Inflationary risks that include higher oil prices are undermining asset prices,'' said Patrick Bennett, a currency strategist with Societe Generale SA in Hong Kong. ``Equities are under quite broad pressure. That coupled with slowing external demand is really a difficult combination for Asian currencies.''

The ringgit traded at 3.2725 versus the dollar as of 4:22 p.m. in Kuala Lumpur, versus 3.2665 late yesterday, according to data compiled by Bloomberg. It earlier dropped to 3.2825, the weakest since Jan. 24. The peso declined 0.4 percent to 45.20 a dollar in Manila, according to Tullett Prebon Plc.

``There are fundamental issues about inflation, consumer spending and earnings visibility, resulting in recent market liquidation,'' said Pankaj Kumar, who manages $540 million in assets as chief investment officer at Kurnia Insurans Bhd. in Petaling Jaya, near Kuala Lumpur. ``Some of the foreign hot money is getting out and the odds are also against the ringgit appreciating sooner.''

Political Risks

Crude oil for August delivery rose 0.5 percent to $141.68 a barrel, after reaching an all-time high of $143.67 on June 30. Malaysia has raised retail fuel prices seven times since May 2004 to reduce the amount it pays in fuel subsidies, pushing inflation to a 22-month high in May.

Some 10,000 Malaysians rallied in Kuala Lumpur yesterday to support opposition leader Anwar Ibrahim, who is facing a new sodomy allegation he rejected as an attempt to derail his political comeback.

``The political climate has certainly risen several notches over the last couple of days,'' said Tricia Yeoh, a director at the Center for Public Policy Studies in Kuala Lumpur. ``Even politicians are thrown into shock and disarray.''

The peso dropped for a fourth day on concern rising crude oil prices will add to inflation and widen the trade deficit.

Risk Aversion

The Philippine currency fell to near a nine-month low as local shares declined for a fourth day. Inflation may have accelerated to 10 percent in June from a year earlier, after a 9.6 percent gain in May, economists said before a government report on July 4.

``You have inflation, risk aversion, a widening trade deficit and stocks falling,'' said Catherine Tan, head of regional foreign exchange at Thomson Financial Asia in Singapore. ``The story is the same across the region except that in the peso, it seems the central bank appears not so keen on intervening.''

The peso may drop to 47 this quarter should oil prices rise and economic growth slow in the U.S., the nation's biggest export market and largest source of remittances, she said.

The Philippine trade deficit may widen to $11.5 billion this year from $8.6 billion last year on higher oil and rice prices, the central bank said last week. The nation imports almost all its oil needs and is the biggest buyer of rice.

Won Reverses Losses

South Korea's won rose the most in two weeks on speculation the government bought the currency to help curb the fastest inflation in a decade.

The won advanced to a one-week high, reversing losses, as the finance ministry said in its semiannual policy report today that policy makers aim to prevent ``drastic movements'' in the currency. South Korea bought about $7 billion worth of won since the end of May to boost the value of the currency and slow inflation, JoongAng Ilbo newspaper reported yesterday.

``Authorities seem to have sold $2 to $3 billion in the market today,'' said Sam Hong, a currency dealer with Shinhan Bank in Seoul. ``The intervention was an unavoidable choice for them. It left a strong message to the market.''

The won gained 1.2 percent to 1,035 against the dollar at the close of trading in Seoul, after dropping 1 percent earlier, according to Seoul Money Brokerage Services Ltd.

Central banks intervene in currency markets by arranging purchases or sales of foreign exchange. A stronger currency helps limit inflation by lowering the cost of imports.

`Misperception'

Korea's currency had traded near a six-week low earlier as crude oil approached its June 30 record. Korea imports almost all of its energy needs. The won slid 10 percent this year, Asia's worst-performing currency after the baht.

The won's losses may be limited because the current-account deficit will narrow, Bank of Korea Deputy Governor Rhee Gwang-Ju said in an interview yesterday.

The deficit, the broadest measure of international trade, will shrink to $2.5 billion in the second half from $6.5 billion in the first six months, Rhee, the central bank's head of international affairs, said. There is a ``misperception'' of the risks posed to Asia's fourth-biggest economy by an increase in its overseas debt, he said.

``There will be no convincing reasons that the won will depreciate further,'' said Rhee, 57. ``The won has depreciated since early March but the trend is not likely to continue for the rest of the year.''

Bank of Korea's Rhee yesterday declined to comment on the currency policy.

Elsewhere, the Indonesian rupiah was little changed at 9,223 per dollar and Taiwan's dollar traded at NT$30.372 versus NT$30.360 yesterday. Singapore's dollar fell 0.1 percent to S$1.3621 while the Thai baht was little changed at 33.40. Vietnam's dong was at 16,846.50 compared with 16,844.50 yesterday.