Asian Currencies Gain, Led by Won, After Global Funds Raise Share Holdings

Asian currencies strengthened, led by Malaysia’s ringgit, after global funds added to holdings of regional assets on optimism policy makers will take steps to boost economic growth.

International investors bought $152 million more shares than they sold in Indonesia, Thailand and the Philippines this week through yesterday, according to exchange data. India’s rupee rose for a third day after the central bank cut lenders’ cash reserve-ratio yesterday. The Philippine peso rose to the highest level in more than two months after policy makers cut borrowing costs last week.

Asia has built up plenty of room to provide fiscal stimulus and to lower interest rates in response to a worsening external environment,” said Michael Hasenstab, who runs the $57 billion Templeton Global Bond at San Mateo, California-based Franklin Templeton Investments. “Global liquidity will continue to flow into Asian markets blessed with strong macro fundamentals, particularly as the region’s currencies still appear largely undervalued.”

The ringgit advanced 0.9 percent from Jan. 20 to 3.0775 per dollar as of 4 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The won rose 0.2 percent from yesterday to 1,125.95 and the peso climbed 0.1 percent to 43.115. Financial markets in China, Hong Kong and Taiwan are closed today for the Lunar New Year, while Malaysia’s markets were closed in the first two days of the week.

The MSCI Asia-Pacific Index of stocks rose to the highest level since October before the Federal Open Market Committee releases forecasts today for benchmark U.S. interest rates for the first time.

Growth Forecast

The world’s largest economy expanded an annualized 3 percent in the three months through December from a year earlier after growing 1.8 percent in the previous quarter, according to the median forecast of economists in a Bloomberg News survey before Commerce Department data due on Jan. 27.

The won rose to the strongest level since Dec. 7 on speculation exporters are converting their foreign exchange to meet month-end cash demand. The South Korean economy expanded 3.5 percent in the three months ended December from a year earlier, matching the pace in the preceding three months, according to the median forecast of economists in a Bloomberg survey before official data due tomorrow.

“The market is expecting to receive a flurry of exporter settlements as the month-end nears,” said Hwang Sun Min, a Seoul-based currency dealer at Kookmin Bank. “The won seems to be able to sustain its upward momentum as offshore players favor the local currency over the dollar for now ahead of the Federal Reserve’s meeting.”

Thailand’s baht dropped 0.2 percent to 31.54 per dollar as the currency’s advance to near a three-week high attracted demand from importers. The Bank of Thailand cut its one-day repurchase rate to 3 percent from 3.25 percent today, a move predicted by all 15 economists in a Bloomberg survey. The currency fell 0.2 percent to 31.54 per dollar, and touched 31.35 yesterday, the strongest level since Jan. 4.

“There was quite a good volume of trade coming from the corporate side today and it was quite a good level to buy the dollar for them,” said Satoshi Ushijima, vice president of treasury at Mizuho Corporate Bank Ltd. in Bangkok.

Elsewhere, the Indian rupee climbed 0.1 percent to 50.0375 per dollar and the Indonesian rupiah dropped 0.5 percent to 9,038.

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

To contact the editor responsible for this story: Ven Ram at at vram1@bloomberg.net

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