Asian Currencies Extend Gains as Stocks Rise on Fed Speculation

Asian currencies gained as regional stocks rose on speculation Federal Reserve Chairman Ben S. Bernanke will today hint at further efforts to boost the U.S. economy, such as a third round of quantitative easing.

Malaysia’s ringgit rose the most this month as bets for global stimulus mounted a day after the International Monetary Fund cut its 2013 world economic growth forecast to 3.9 percent from an April estimate of 4.1 percent. U.S. retail sales fell for a third month, dropping 0.5 percent in June from a year earlier. China’s State Council may this week give details of easing measures to support growth, Nomura Holdings Inc. said yesterday.

“The weak U.S. retail sales have spurred hopes of quantitative easing,” said Kenix Lai, a currency analyst at Bank of East Asia Ltd. in Hong Kong. “Investors are also betting China will announce more stimulus measures and economic growth could regain momentum in the second half.”

The ringgit rallied 0.5 percent to 3.1650 per dollar as of 4:11 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. South Korea’s won closed 0.3 percent stronger at 1,143.62, the Philippine peso rose 0.3 percent to 41.722 and China’s yuan gained 0.08 percent to 6.3738. Thailand’s baht strengthened 0.2 percent to 31.57 per dollar.

The Bloomberg-JPMorgan Asia Dollar Index rose for a third day, while its 60-day historical volatility was steady at 3.71 percent. The Dollar Index fell 0.1 percent on concern that more money-printing for bond purchases would weaken the greenback. The MSCI Asia Pacific Index (MXAP) of stocks climbed 0.4 percent.

IMF Cut

The IMF cut its 2013 global growth forecast yesterday as Europe’s debt crisis slows expansion in emerging markets from China to Singapore. India’s potential rate of economic growth may have fallen to 7.5 percent, central bank Governor Duvvuri Subbarao said in the text of a speech he delivered in Mumbai today. That compares with an 8 percent estimate in the Reserve Bank of India’s annual report for 2009-2010 and 8.5 percent before the onset of the global financial crisis, he said.

“Markets are getting a bit ahead of themselves and are pushing into a higher chance of QE3 sooner rather than later,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. Investors “are looking for real returns elsewhere” as the greenback weakened, he said.

Fed Chairman Bernanke will address the outlook for the economy when he delivers his semi-annual monetary policy report to Congress later today.

China’s central bank set its daily fixing rate at 6.3167 yuan per dollar versus 6.3208 yesterday. China Securities Journal reported yesterday that a State Council meeting as early as July 18 may be followed by policy measures, citing unidentified analysts.

Elsewhere, Indonesia’s rupiah dropped 0.2 percent to 9,467 per dollar, Taiwan’s currency advanced 0.1 percent to NT$29.988 and the Vietnamese dong was steady at 20,853.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Fion Li in Hong Kong at fli59@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.