Asian Currencies Advance on Fund Inflows, Improved Manufacturing Reports

Asian currencies rose for a fifth week, led by Taiwan’s dollar, as foreign investors poured money into the region amid optimism the global economy is recovering.

The Bloomberg-JPMorgan Asia Dollar Index saw its longest weekly run of gains since October 2010 after reports this week showed manufacturing in the U.S., China and Germany picked up in January. The currencies were little changed yesterday as regional stocks snapped a three-day advance after Greece and its creditors struggled to reach an agreement on their debt swap.

“We have seen pretty good data in Asia, Europe and the U.S. and that led to risk-on sentiment and supported the Asian currencies,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo. “The move is quite well correlated with fund inflows to the region. Investors are cautiously watching developments regarding Europe’s debt crisis.”

The Asia (ADXY) Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, climbed 0.3 percent this week to 117.78 in Singapore. It reached a three-month high yesterday. The Taiwan dollar jumped 1.5 percent to NT$29.545 as of the onshore close, according to Taipei Forex Inc. Thailand’s baht appreciated 1 percent to 30.85 and India’s rupee surged 1.3 percent to 48.6950.

Foreign funds bought $2.5 billion more South Korean, Taiwanese and Thai equities than they sold in the first four days of this week and a net $536 million of India’s shares in the first three days, according to exchange data.

Taiwanese Bond Rally

Greece and its creditors are locked in talks over a debt- swap deal for the nation. In discussions late last week in Athens, bondholders lowered their demands for an average coupon on the new debt they would get after European officials demanded they take steeper losses.

A Chinese purchasing managers’ manufacturing index rose to 50.5 in January from 50.3 the previous month and more than the 49.6 median forecast of economists surveyed by Bloomberg, data showed Feb. 1. Reports the same day showed Germany’s index advanced to 51 from 48.4 and the U.S. Institute for Supply Management’s gauge climbed to 54.1, the most since June, from a revised 53.1.

Taiwan’s dollar completed the biggest five-day rally in a year as foreign funds pumped money into the island’s assets and official data on Jan. 30 showed unemployment declined in December. Yields on the government’s 1 percent bonds due January 2017 dropped three basis points, or 0.03 percentage point, this week to 0.94 percent, prices from Gretai Securities Market show.

“Foreign inflows boosted the Taiwan dollar,” said Ivy Leung, a Taipei-based fixed-income trader at Polaris Securities Co. “The appreciation in the Taiwan dollar has contributed to a bond rally.”

Thai Growth Rebounding

The baht had a third consecutive weekly gain and reached a seven-week high on Jan. 31, a day after the finance ministry said gross domestic product may rise 5 percent in 2012, compared with projected growth of 1.1 percent last year.

The ringgit climbed for a fifth week, the longest winning streak since 2010, before data that economists predict will show factory-output growth quickened for the first time in four months. The ringgit added 1 percent to 3.0088 per dollar.

Industrial production increased 1.8 percent in December from a year earlier after rising by the same magnitude in November, according to the median estimate of economists in a Bloomberg survey before government data due on Feb. 9.

Elsewhere, South Korea’s won rose 0.5 percent this week to 1,118.07 per dollar. The Philippine peso added 0.6 percent to 42.61 and China’s yuan strengthened 0.6 percent to 6.3028. Indonesia’s rupiah was little changed at 8,980.

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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