Asian Currencies Strengthen, led by Philippine Peso, on Greek Optimism
Asian currencies gained, led by the Philippine peso, as optimism European leaders will break a deadlock over a new Greek bailout bolstered demand for emerging- market assets.
The Bloomberg-JPMorgan Asia Dollar Index hit a 14-year high after Germany said Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a joint position on Greece’s debt situation, boosting the chances of agreement at a summit today to stamp out contagion in European bond markets. Data today showed Thailand’s exports increased more than economists expected in June. Indonesia is likely to achieve an investment- grade credit rating before the end of next year, Fitch Ratings said this week.
The peso strengthened 0.2 percent to 42.618 per dollar as of 4:48 p.m. in Manila, according to data compiled by Bloomberg. Malaysia’s ringgit rose 0.1 percent to 2.9955 and China’s yuan gained 0.1 percent to 6.4516, earlier touching a 17-year high of 6.4505.
“There’s a brief relief from the European debt situation now, improving sentiment for riskier assets,” said Shigehisa Shiroki, chief trader on the Asian and emerging-markets team at Mizuho Corporate Bank Ltd. in Tokyo. “Funds have been flowing into the region, especially to Southeast Asia. We’ve seen some positive news for this part of the region, including a possible credit-rating upgrade.”
Favorable Outlook
Global funds bought $2.7 billion more Indonesian, South Korean and Thai equities than they sold this month through yesterday, exchange data show. 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.
The peso reached the strongest level since November after the International Monetary Fund said the near-term outlook for the economy is favorable. The government’s budget deficit in the first half was below its ceiling, the Philippine Daily Inquirer reported today, citing Budget Secretary Florencio Abad. IMF mission chief Vivek Arora said yesterday the Philippines will likely continue to attract capital inflows given its strong growth outlook.
“The markets are bullish because of the positive news flow,” said Dave Estacio, a senior fixed-income trader at First Metro Investment Corp. in Manila.
The ringgit strengthened for a third day after a government report showed inflation quickened, boosting speculation the central bank will raise interest rates. Consumer prices increased 3.5 percent from a year earlier in June, the most in more than two years, according to data released yesterday after the markets closed. Economists expected a 3.6 percent gain, a Bloomberg poll showed.
More Rate Increases
“The so-called agreement between Germany and France on the Greek debt crisis is driving interest in emerging-market assets,” said Yeo Chin Tiong, head of financial markets at Alliance Bank Bhd. in Kuala Lumpur. “Though Malaysia’s consumer prices came in slower-than-expected, there is still a case for the central bank to hike rates if prices continue to rise.”
Central banks in Malaysia, China, India, South Korea, Indonesia, Taiwan, Thailand and the Philippines have all boosted borrowing costs this year, while their counterparts in the U.S. and Japan kept benchmark rates at a maximum 0.25 percent. Bank Negara Malaysia Governor Zeti Akhtar Aziz said this week that containing inflation is a priority as the benchmark policy rate of 3 percent is “quite low.”
The baht touched an 11-week high as a report showed Thai exports rose 16.8 percent in June from a year earlier, more than the median forecast in a Bloomberg survey of 10 percent gain. Overseas sales account for about two-thirds of Southeast Asia’s second-largest economy. The currency was little changed at 29.92.
Elsewhere, South Korea’s won added 0.1 percent to 1,054.70 per dollar and the Singapore dollar advanced 0.1 percent to S$1.2129, according to data compiled by Bloomberg. India’s rupee was little changed at 44.4675 and Taiwan’s dollar slid 0.1 percent to NT$28.89.
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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