Asian Currencies Complete Weekly Gains, Led by Baht, Korea Won, on Inflows
Sept. 9 (Bloomberg) -- Dariusz Kowalczyk, Hong-Kong based senior economist at Credit Agricole CIB, talks about the outlook for the South Korean won. The currency climbed to its strongest in a month on speculation the nation’s rising exports and an improving economy will spur inflows. The central bank today unexpectedly refrained from raising interest rates to support growth. Kowalczyk also discusses the outlook for the global economy, and the Obama administration's policies. He talks with Linzie Janis on Bloomberg Television's "Global Connection." (Source: Bloomberg)
Asian currencies rose this week, led by the Thai baht and South Korea’s won, as the world’s fastest economic growth drew funds to the region and data in the U.S., China and Japan brightened the outlook for exports.
The Bloomberg-JPMorgan Asia Dollar Index climbed to a four- month high as equities in India, Indonesia, South Korea, Taiwan and Thailand attracted more than $1 billion from abroad. U.S. jobless claims were the lowest in two months, China’s imports rose more than economists forecast and Japan raised its estimate for second-quarter economic growth, reports showed this week. The baht and Malaysia’s ringgit reached 13-year highs.
“There has been quite a lot of demand to buy the baht from offshore, probably from foreigners to buy Thai stocks and bonds,” said Kozo Hasegawa, a Bangkok-based foreign-exchange trader at Sumitomo Mitsui Banking Corp. “Money is flowing into Asia on the region’s strong economic outlook.”
The baht appreciated 1.2 percent this week to 30.83 per dollar as of 3:22 p.m. in Bangkok yesterday, according to data compiled by Bloomberg. The won rose 0.8 percent to 1,165.85, yesterday touching a one-month high of 1,159.98, and the Taiwan dollar gained 0.3 percent to NT$31.91. The yuan climbed 0.5 percent to 6.7650 as China posted a third monthly trade surplus of more than $20 billion.
Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund forecast in July. China, the No. 1 export market for Korea, Taiwan and Thailand, yesterday reported a 35.2 percent gain in August imports. That was more than July’s 22.7 percent increase and the median 27.5 percent advance forecast in a Bloomberg survey of economists.
Inflows, Growth
The baht rose for a sixth week, the longest run of gains since March, and strengthened beyond 31 per dollar for the first time since 1997 as exchange data showed overseas investors bought $133 million more Thai shares than they sold in the past four days. The currency has climbed 4.5 percent since July 23, when the Bank of Thailand predicted that gross domestic product will expand as much as 7.5 percent in 2010.
South Korea’s won had a second weekly gain as overseas investors pumped $257 million into the nation’s equities in the past four days, helping drive the Kospi stock index to the highest level since June 2008. The Bank of Korea held off from raising interest rates this week, citing concern about the strength of the recovery from a global recession. Ten of 14 economists surveyed by Bloomberg forecast a rate increase.
“Demand for safer assets is subsiding and that will continue to help strengthen the won,” said Seo Jeong Hun, chief economist at Korea Exchange Bank in Seoul. “But risks haven’t subsided. We have to remember that Korea is highly dependent on the global economy and we’re not immune to external shocks.”
Stronger Yuan
The yuan had its biggest weekly gain since June, when China said it would end a two-year peg to the dollar and pursue a more flexible exchange rate. U.S. Treasury Secretary Timothy F. Geithner called on China to let its currency strengthen at a faster pace on Sept. 8, a day after China’s Foreign Ministry said “external pressure” wouldn’t affect yuan policy.
“China’s move amounts to political theater, a movement meant to keep the U.S. happy at a time when Geithner, the European Union and International Monetary Fund are all calling foul,” said Douglas Borthwick, Connecticut-based managing director at Faros Trading LLC.
Elsewhere in Asia, the ringgit strengthened 0.4 percent to 3.1065 per dollar this week and Indonesia’s rupiah gained 0.4 percent to 8,963. The Philippine peso jumped 1.3 percent to 44.11, India’s rupee gained 0.4 percent to 46.47 and Singapore’s dollar rose 0.4 percent to S$1.3415. Financial markets were shut in all the five countries yesterday for holidays.
To contact the reporters on this story: Andrea Wong in Hong Kong at awong268@bloomberg.net; Yumi Teso in Bangkok at yteso1@bloomberg.net.
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