Asian currencies posted the biggest weekly rally in a month after a rebound in China trade data boosted the outlook for regional exports and growth.
South Korea’s won led the advance, helping spur a 0.4 percent gain in the Bloomberg-JPMorgan Asia Dollar Index. Overseas shipments from the world’s second-biggest economy rose 5.1 percent in July, while imports increased 11 percent, with both figures beating forecasts and recovering from a contraction in June. The numbers come amid concerns about a possible end to the Federal Reserve’s monetary stimulus that has driven demand for emerging-market assets.
“China’s better-than-expected trade data turned sentiment and supported many Asian currencies,” said Jahng Won, a foreign-exchange trader at Shinhan Bank in Seoul. “External factors such as the Fed’s tapering schedule are what investors are more concerned about.”
The won strengthened 1 percent this week to 1,112.30 per dollar in Seoul, and reached 1,107.55 yesterday, the highest level since May 14, according to data compiled by Bloomberg. The yuan gained 0.12 percent, the best five-day performance in three months, and touched 6.1143, the strongest since the government unified the official and market exchange rates in 1993.
It was a shortened week for many Asian currencies due to holidays to mark the end of the Muslim fasting month of Ramadan. Financial markets in Malaysia, India and the Philippines were closed yesterday, while Indonesia remained shut since Aug. 2.
South Korea’s economy is growing “moderately,” led mainly by exports, Bank of Korea said this week after keeping interest rates at 2.5 percent. A slowdown in China and odds of an end to U.S. asset purchases pose downside risks, it said.
China reported yesterday that consumer prices climbed 2.7 percent in July from a year earlier, less than the median estimate for a 2.8 percent gain in a Bloomberg survey. Data also showed factory production increased 9.7 percent from a year earlier and retail sales advanced 13.2 percent.
“We see a modest acceleration of growth of industrial output, exports, imports and retail sales, and widening of the trade surplus,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, wrote in a note yesterday. “Firmer and higher-than-expected activity numbers, combined with stable and lower-than-anticipated price pressures, would be positive for sentiment towards the country and in emerging-market Asia.”
Elsewhere in Asia, Taiwan’s dollar advanced 0.6 percent this week to NT$29.955 against its U.S. counterpart and the Thai baht appreciated 0.1 percent to 31.24. The Malaysian ringgit last traded at 3.2545 on Aug. 7 versus 3.2578 on Aug. 2. The Philippine peso rose 0.1 percent to 43.585 and the Indian rupee climbed 0.4 percent to 60.86 in the four days markets were open.