Asian Currencies Gain After Bernanke Remarks on Further Easing
Asian currencies advanced after Federal Reserve Chairman Ben S. Bernanke said U.S. policy makers are studying further monetary easing, which previously has increased the flow of funds seeking higher-yielding assets.
Malaysia’s ringgit headed for its longest winning streak since April and China’s yuan advanced for a third day. Bernanke said yesterday possible Fed stimulus measures may include adding to two rounds of asset purchases since the global financial crisis. South Korea’s won pared its biggest gain in two weeks after North Korea announced Kim Jong Un’s appointment to the nation’s top military post.
“There will probably be a third round of quantitative easing which will probably de-base the U.S. dollar and support Asian currencies,” said Chua Hak Bin, a Singapore-based economist at Bank of America Merrill Lynch.
The ringgit strengthened 0.3 percent to 3.1575 per dollar as of 4:40 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The won gained 0.1 percent to 1,141.55 after rising as much as 0.5 percent. The Philippine peso rose 0.1 percent to 41.670 and the yuan climbed 0.04 percent to 6.3702.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s currencies, was steady following a three-day advance. Its 60-day historical volatility dropped to 3.69 percent from 3.71 percent.
“We haven’t really come to a specific choice at this point, but we are looking for ways to address the weakness in the economy should more action be needed to promote a sustained recovery in the labor market,” Bernanke said in his testimony to Senate Banking Commission in Washington yesterday.
The Fed chairman resumes his semi-annual testimony before the House Financial Services Committee today.
South Korea’s currency trimmed gains and the Kospi Index fell 1.4 percent. Kim assumed the title of marshal, the North’s state-run Korean Central News Agency said in a statement today, seven months after he took over the totalitarian state following the death of his father, Kim Jong Il.
China’s yuan rose after the People’s Bank of China set the currency’s daily reference rate at 6.3140, or 0.04 percent stronger than yesterday.
Premier Wen Jiabao said yesterday that China’s labor situation will become more “severe,” underscoring concern that the weakest economic growth since 2009 will lead to more job losses. The government will continue to implement a more “proactive” labor policy, he said.
“Wen’s remarks on employment policy triggered expectations of fresh pro-growth measures in China,” according to a research note from Credit Agricole CIB today. The State Council could meet as early as today that may be followed with policy-easing measures, the China Securities Journal reported on July 16.
Thailand’s baht slid 0.4 percent to 31.68 per dollar from near a two-week high, while India’s rupee weakened 0.2 percent to 55.221 on speculation local importers boosted dollar purchases to benefit from a more favorable exchange rate.
“Importers, including gold companies, may want to buy the dollar as the baht strengthened lately,” said Norawit Suparinayok, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “Risk sentiment is quite stable and some investors may think gold prices will go up.”
Oil importers in India bought dollars before Bernanke resumes his testimony, according to Vikas Babu, a trader at state-run Andhra Bank (ANDB) in Mumbai.
Elsewhere, Indonesia’s rupiah fell 0.2 percent to 9,482, Taiwan’s dollar dropped 0.1 percent to NT$30.002 and the Vietnamese dong was little changed at 20,850.
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