Asian Currencies Rally on Speculation Exporters Repatriate Funds

Asian currencies rebounded, led by India’s rupee, on speculation the region’s exporters took advantage of yesterday’s drop to repatriate earnings as the end of the month approaches.

The Bloomberg-JPMorgan Asia Dollar Index slid the most since Aug. 2 yesterday after German Chancellor Angela Merkel and French President Francois Hollande clashed over the weekend on a timetable to introduce joint oversight of Europe’s banks. Taiwan’s dollar advanced after data showed yesterday that factory output unexpectedly rose in August.

“Yesterday’s weakness provides good levels for exporters to sell their dollars,” said Radhika Rao, an economist at Forecast Pte. in Singapore. “I don’t think the strength in Asian currencies is sustainable as much of the attention is back to what’s happening in the euro zone.”

The rupee strengthened 0.3 percent to 53.3175 per dollar as of 2 p.m. in Mumbai, according to data compiled by Bloomberg. Taiwan’s dollar, Malaysia’s ringgit and South Korea’s won gained 0.1 percent to NT$29.451, 3.0690 and 1,119.45, respectively. The Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, increased 0.06 percent after sliding 0.18 percent yesterday.

The Taiwanese currency climbed after official data yesterday showed industrial production rose 1.89 percent last month from a year earlier, the most since February and compared with the median estimate in a Bloomberg survey for a decline of 0.6 percent. Export orders declined in August for a sixth month, a report showed last week. Global funds bought $133 million more Taiwanese stocks than they sold yesterday, taking net purchases in September to $1.7 billion, exchange data show.

Malaysian Budget

“Volume is a bit thin today; it’s mostly trade-related as exporters sell the greenback,” said Tarsicio Tong, a foreign- exchange trader at Union Bank of Taiwan (2838) in Taipei. “Although we’re seeing some improvements in industrial output data, exports numbers need to turn positive as well to give sentiment a boost.”

The ringgit rebounded from its biggest loss in three months before the government releases its budget for next year on Sept. 28. Malaysia wants to cut its budget deficit to 3 percent of gross domestic product by 2015 from about 4.7 percent this year, Second Finance Minister Ahmad Husni Mohamad told reporters in Kuala Lumpur on Sept. 11.

“A cut in the budget deficit will have a positive impact on the ringgit in the medium to long term,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. (MAY) in Singapore. Optimism exporters will bring home money earned offshore before the end of September is also supporting the local currency, he said.

Chinese Stimulus

The yuan snapped a two-day decline on speculation increased government spending will help revive growth in the coming quarters. The currency traded near a five-month high after official data showed new bank loans surged 30 percent in August, the most since March, signaling Premier Wen Jiabao’s steps to spur growth are having an impact.

“We started to look for a little bit of renminbi appreciation,” said Cliff Tan, a currency strategist at Bank of Tokyo-Mitsubishi UFJ in Hong Kong. “We haven’t been so bearish on the Chinese economy. Fiscal spending will start to have an impact on economic indicators within a month or two.”

Elsewhere, the Philippine peso, Indonesia’s rupiah and Thailand’s baht each strengthened 0.1 percent to 41.735 per dollar, 9,586 and 30.92, respectively. Vietnam’s dong was little changed at 20,875.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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