South Korea’s won led gains in Asian currencies this week amid speculation the region’s policy makers would refrain from reining in exchange rates before a meeting of the Group of 20 nations.
The Bloomberg-JPMorgan Asia Dollar Index had its first weekly advance in a month as a draft statement obtained by Bloomberg News showed G-20 leaders would reaffirm a pledge to avoid competitive devaluation at a meeting that began in Moscow yesterday. The yen, which had advanced in Asian trading, fell after a G-20 official said there isn’t a plan to echo a Group of Seven promise to avoid using policies to target exchange rates.
“We are unlikely to see any strong action from Korea or other Asian central banks before the G-20 meeting,” said Roy Teo, a currency strategist at ABN Amro Bank NV in Singapore. “The impact of yen weakness on Asian economies is likely to be relatively muted” because of the rise of China as one of the top markets for the region’s exports, he said.
The won strengthened 1.6 percent this week to 1,078.20 per dollar in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit advanced 0.7 percent to 3.0780 and the Philippine peso rose 0.2 percent to 40.602. The yen fell 0.7 percent to 93.49 per dollar yesterday, taking its weekly decline to 0.9 percent. Markets in China and Taiwan were closed this week for the Lunar New Year holiday.
The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, climbed 0.1 percent in the first five-day advance since the period ended Jan. 18. The gauge touched a three-month low on Feb. 12 after Ha Sung Keun, a Bank of Korea board member, said Jan. 28 that a global currency war seems to be breaking out as monetary easing in Japan drags the yen lower. South Korea competes with Japan in the world market for electronics and autos.
The won touched the highest level in February yesterday after the Bank of Korea kept its benchmark interest rate unchanged for a fourth month on Feb. 14, maintaining the yield advantage on local assets over developed nations. The bank’s policy rate of 2.75 percent compares with a maximum of 0.25 percent in the U.S. and 0.1 percent in Japan.
The ringgit appreciated for a second week as reports showed Japan’s economy unexpectedly shrank and the euro-area recession deepened, increasing the appeal of Malaysian assets.
The Southeast Asian economy grew 5.5 percent last quarter from a year earlier, after expanding 5.2 percent in the previous three months, according to a Bloomberg News survey before data due Feb. 20. Japan’s gross domestic product shrank an annualized 0.4 percent in the fourth quarter, while the euro-area’s GDP fell 0.6 percent from previous three months, according to official data released in Tokyo and Luxembourg on Feb. 14.
India’s rupee had its worst week in 2013 as provisional data showed the nation’s trade deficit widened last month. The currency weakened 1.3 percent to 54.2250 per dollar.
Merchandise shipments climbed 0.8 percent from a year earlier and imports advanced 6.1 percent, leaving a trade gap of $20 billion, Director General of Foreign Trade Anup Pujari said Feb. 13. Central bank Governor Duvvuri Subbarao said Feb. 11 that the current-account shortfall in the year through March may be “significantly higher” than a record 4.2 percent of gross domestic product in the previous 12 months.
“The pressure on the rupee is going to continue until the monthly trade deficit drops to about $15 billion or $16 billion,” said Samiran Chakraborty, an economist at Standard Chartered Plc in Mumbai.
Elsewhere, Indonesia’s rupiah was little changed from a week ago at 9,670 per dollar and the Thai baht declined 0.2 percent to 29.86.