Asian Currencies Advance, Led by Baht, on Fed Easing Optimism
Asian currencies gained, led by Thailand’s baht, on speculation the Federal Reserve will unveil a third round of quantitative easing, a policy that boosts the supply of dollars and spurs demand for emerging-market assets.
The baht and South Korea’s won rose the most in a week after Fed Chairman Ben S. Bernanke said Aug. 31 that U.S. joblessness was a “grave concern” and further monetary easing can’t be ruled out. Chinese factory output unexpectedly shrank for the first time in nine months in August, a government survey showed Sept. 1.
“Weak employment data may lead to further easing by the Fed as Bernanke showed a great concern about the labor market,” said Disawat Tiaowvanich, a foreign-exchange trader at Bangkok Bank Pcl. (BBL) “That supports Asian currencies as the easing may boost capital inflows to Asia. But gains in the regional currencies may be limited amid concern about China’s economy.”
The baht rose 0.4 percent to 31.24 per dollar as of 3:05 p.m. in Bangkok, according to data compiled by Bloomberg. The won appreciated 0.3 percent to 1,131.05, Taiwan’s dollar climbed 0.2 percent to NT$29.92 and China’s yuan gained 0.1 percent to 6.3413. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, was headed for its best close since Aug. 9.
Bernanke said “the unemployment rate is likely to remain far above levels consistent with maximum employment for some time” unless the economy begins to grow rapidly. U.S. central bankers meet Sept. 12-13 and will work up a fresh round of forecasts for the economy and consider what steps are needed to reduce a jobless rate that has been stuck above 8 percent for more than three years.
China’s Purchasing Managers Index fell to 49.2 from 50.1 in July, below the estimates of 24 of the 25 analysts in a Bloomberg News survey. The dividing line between expansion and contraction is 50.
The Thai baht rose for a second day after foreign funds bought $394 million more Thai government bonds than they sold on Aug. 31, the biggest net purchases since Aug. 8, according to data from the Thai Bond Market Association. Overseas investors pumped $1 billion into the securities last week.
The won gained as the prospect of monetary easing in the U.S. offset Korean trade figures showing exports fell for a second month. Shipments from Asia’s fourth-biggest economy dropped 6.2 percent in August from a year earlier, the sixth monthly decline of 2012, official data showed on Sept. 1.
“Bernanke’s comments weren’t enough to assure a drastic pick-up in investor sentiment, but we’ll be seeing some relief rally in the currency market today,” said Jude Noh, a Seoul- based chief foreign-exchange trader at Suhyup Bank. “South Korean exporters that have delayed currency conversion last month may also sell the dollar.”
Elsewhere in Asian trading, the Philippine peso climbed 0.3 percent to 41.975 per dollar, Malaysia’s ringgit advanced 0.2 percent to 3.1103 and India’s rupee rose 0.2 percent to 55.43. Indonesia’s rupiah was little changed at 9,579.