Asian Currencies Strengthen Most in a Week as China GDP Beats Expectations

Asian currencies advanced the most in a week as data showed China’s economy expanded faster than expected in the fourth quarter, easing concern a marked slowdown would damp the region’s export outlook.

Gross domestic product in Asia’s largest economy rose 8.9 percent, the statistics bureau said today, beating the median forecast for 8.7 percent in a Bloomberg survey of economists. Growth was the slowest in 10 quarters, which may prompt China to ease monetary policy. Today’s data could induce further cuts to banks’ reserve-requirement ratios, according to Henderson Global Investors Ltd. Currencies opened higher after France’s borrowing costs fell at a debt sale yesterday, tempering concern Europe’s debt crisis is worsening.

“Policy makers now have more room to drive growth by loosening monetary policy,” said Caroline Maurer, a Singapore- based fund manager at Henderson, which managed $100 billion of assets as of Sept. 30. “China demand is now very important for the Asian region.”

India’s rupee led gains, strengthening 0.9 percent to 50.945 per dollar as of 1:34 p.m. in Mumbai. South Korea’s won climbed 0.8 percent to 1,145.40 and the Thai baht added 0.4 percent to 31.79. The yuan gained 0.05 percent to 6.3133, after being down as much as 0.10 percent before the GDP report.

The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies excluding the yen, rose 0.3 percent, the most since Jan. 10. The MSCI Asia-Pacific Index of stocks rallied 2 percent, following gains in European shares, even after Standard & Poor’s cut the top ratings of France, Austria and the European Financial Stability Fund.

No Hard Landing

Other official reports from China today showed industrial production rose 12.8 percent in December from a year earlier, beating the median forecast for a 12.3 percent gain in a Bloomberg survey. Growth in retail sales reached 18.1 percent, exceeding the consensus for a 17.2 percent increase. China’s central bank cut lenders’ reserve ratios on Dec. 5 for the first time since 2008. Inflation last month was 4.1 percent, the slowest in 15 months.

“The better-than-expected GDP figures have eased the fear of a potential hard landing in China,” said Daniel Chan, chief economist at BWC Capital Markets in Hong Kong. “However, a slowdown in China’s economy is inevitably on the way. Investors will remain cautious over export prospects as Europe’s debt crisis is yet to be solved.”

Philippine Rate Cut

The Philippine peso strengthened 0.6 percent to 43.625, touching the strongest level in two weeks, ahead of a review of borrowing costs on Jan. 19. Thirteen of 17 economists surveyed by Bloomberg forecast Bangko Sentral ng Pilipinas will cut its overnight rate by 25 basis points to 4.25 percent. Four expect no change.

“Financial markets are supported by expectations of manageable inflation and a central bank rate cut this week,” said Raul Tan, head of the balance-sheet segment in the treasury group at Rizal Commercial Banking Corp. in Manila.

Singapore’s dollar advanced 0.7 percent to S$1.2836 versus its U.S. counterpart after non-oil domestic exports jumped 9 percent in December from a year earlier, compared with the median forecast in a Bloomberg survey for a 1.2 percent decrease. A surge in pharmaceutical overseas sales, offset a slump in electronics shipments.

Elsewhere, Malaysia’s ringgit gained 0.5 percent to 3.1245 per dollar, according to data compiled by Bloomberg. Taiwan’s dollar rose 0.3 percent to NT$29.995, while Indonesia’s rupiah weakened 0.7 percent to 9,193.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.