Asian Currencies Rise to 7-Month High as Growth Outlook Improves

Asian currencies rose to a seven- month high as U.S. jobs data that beat economists’ estimates eased concern about a global slowdown and buoyed demand for emerging-market assets.

India’s rupee led gains with its fifth weekly advance, the longest winning streak since February, while South Korea’s won reached an 11-month high. Data released Oct. 3 showed American employers added 162,000 jobs last month, topping the median forecast of 140,000 in a Bloomberg survey. The European Central Bank held its benchmark interest rate at a record-low 0.75 percent on Oct. 4 and reiterated its readiness to buy bonds to ease the debt crisis.

“The better data tone is allaying fears the global economy was going to roll off the cliff,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. (WBC) “Confidence in the European outlook has improved.”

The rupee strengthened 1.9 percent this week to 51.8550 per dollar in Mumbai, according to data compiled by Bloomberg. The Philippine peso gained 0.7 percent to 41.427 and Thailand’s baht advanced 0.8 percent to 30.56. Malaysia’s ringgit rose 0.3 percent 3.0530.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-active currencies, climbed as much as 0.4 percent yesterday to 117.64, the highest since March 2. Its 60-day historical volatility declined to 2.60 percent from 2.69 percent a week ago. The MSCI Asia Pacific Index of shares completed its best back-to-back gain in three weeks after President Mario Draghi said the ECB was prepared to start buying debt.

Fund Inflows

Growth in U.S. manufacturing and service industries also exceeded economists’ forecasts, according to separate reports earlier this week. Expansion in Asia excluding Japan will accelerate to 7.3 percent in 2013 from 6.3 percent this year, HSBC Holdings Plc’s Hong Kong-based economists Qu Hongbin and Frederic Neumann wrote in a note released Oct. 4.

Foreign investors plowed $600 million into the stock markets of India, Indonesia, Taiwan and Thailand this week, according to exchange data. Emerging-market bond funds took in $1.05 billion of new money in the week to Oct. 4, according to research firm EPFR Global, taking this year’s inflows to $39 billion.

“With global central banks introducing measures to support their economies, risk sentiment is improving,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Developed nations will keep interest rates low for a long time and that makes higher yields offered by emerging countries attractive.”

India Reforms

India’s rupee rallied as foreign investors pumped money into the nation’s stocks on speculation policy changes announced by Prime Minister Manmohan Singh will spur growth. The cabinet Oct. 4 approved proposals allowing overseas companies to own as much as 49 percent of insurers and permitted foreign investment in pension funds for the first time.

“The wave of positive reforms from India has caught the market’s attention,” analysts at Citigroup Inc., including Singapore-based Gaurav Garg, wrote in a research report. “The outperformance of the rupee to other regional peers is here to stay as the reform juggernaut keeps rolling.”

Taiwan’s inflation slowed last month to 2.96 percent from 3.43 percent in August, according to government data released yesterday. Price gains decelerated to 3.6 percent from 3.8 percent in the Philippines, another report showed.

South Korea’s won rose for a second day to 1,111.40 per dollar, erasing losses during the week after touching 1,109.60, the strongest level since Nov. 1. A central bank report yesterday showed the nation’s foreign-exchange reserves rose by $5.13 billion to a record $322 billion.

Elsewhere, Taiwan’s dollar climbed 0.1 percent yesterday to NT$29.368 and Indonesia’s rupiah was little changed at 9.592. Vietnam’s dong was steady at 20,890. Financial markets in China were closed during the week for holidays.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

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

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