Asian Currencies Strengthen on Gains in Global Stocks, U.S. Housing Data
South Korea’s won and the Philippine peso led gains in Asian currencies as better-than-expected U.S. housing figures brightened the outlook for exports and a rally in global stocks fanned demand for riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index touched a 14-year high and the MSCI Asia-Pacific Index of shares climbed by the most in a week. Malaysia’s annual inflation accelerated to a two-year high of 3.5 percent in June, while Taiwan’s export orders rose for a 21st month in June, reports showed today. The Standard & Poor’s 500 Index jumped 1.6 percent yesterday, the most in four months, and futures tied to the U.S. stock gauge were 0.3 percent higher as of 5 p.m. in Hong Kong.
“Gains in stocks are improving risk sentiment and boosting demand for Asia’s higher-yielding assets,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Asia has advantages from both a yield and growth perspective.”
The won climbed 0.4 percent to close at 1,055.30 per dollar, according to data compiled by Bloomberg. The peso added 0.3 percent to 42.713, Malaysia’s ringgit advanced 0.2 percent to 3.0010 and Thailand’s baht strengthened 0.1 percent to 29.90.
Central banks in China, India, South Korea, Indonesia, Taiwan, Malaysia, Thailand and the Philippines all boosted borrowing costs this year, while counterparts in the U.S. and Japan kept benchmark rates at a maximum 0.25 percent. Developing economies in Asia will expand 8.4 percent in 2011, outpacing growth of 2.5 percent in the U.S. and 2 percent in countries using the euro, according to International Monetary Fund estimates released last month.
U.S. Housing Starts
The won traded near a three-year high of 1,054.10 per dollar, reached last week, after data showing a pickup in U.S. housing starts damped concern a recovery in the world’s largest economy is losing steam. The currency was also buoyed by speculation policy makers will favor appreciation to stem gains in living costs. The government will announce measures to ease inflation early next week, the nation’s presidential office said in a statement today.
“Strength in the won is gathering pace now with some positive news flow,” said Yu Won Jun , a Seoul-based currency dealer at Korea Exchange Bank. “And the market isn’t as vigilant about intervention after the presidential Blue House expressed concern over inflation.”
U.S. Deficit Deal
The ringgit advanced to its highest level in a week after U.S. President Barack Obama yesterday endorsed a $3.7 trillion debt-cutting plan that would combine tax increases and spending cuts, boosting global stock markets.
“Risk appetite has increased as people like the idea of the budget cut in the U.S.,” said Akira Banno, a treasury adviser in Kuala Lumpur at Bank of Tokyo-Mitsubishi UFJ Bhd. “The ringgit could stay firm against the greenback given the rally in regional stock markets.”
Taiwan’s dollar rose for a second day, gaining 0.2 percent to NT$28.870. A report today showed export orders advanced 9.18 percent in June from a year earlier, after an increase of 11.5 percent the previous month.
Elsewhere, Singapore’s dollar gained 0.2 percent to S$1.2144 against the greenback and the Indonesian rupiah appreciated 0.1 percent to 8,541, according to data compiled by Bloomberg. China’s yuan advanced 0.06 percent to 6.4595 and India’s rupee was little changed at 44.495.
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
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