Rupee Leads Advance in Asian Currencies as Fed Taper Bets Ease

Asian currencies had their best week in two months, led by India’s rupee, after U.S. jobs data tempered speculation the Federal Reserve will cut stimulus that’s buoyed emerging markets.

Payrolls in the world’s largest economy climbed less than economists projected in August and gains for the previous two months were revised down, a Sept. 6 report showed, ahead of a Fed meeting that will discuss the $85 billion monthly debt-purchase program. President Barack Obama has delayed a decision on military strikes against Syria to pursue a Russian offer to get the regime to give up its chemical weapons.

“The weaker-than-expected payrolls number took the heat out of expectations around next week’s Fed meeting, and even if tapering is announced, it’s expected to be quite modest,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “At the same time, the Syrian situation has calmed down.”

The Bloomberg-JPMorgan Asia Dollar Index rose 0.5 percent this week, the most since the period ended July 12, to 115.26 yesterday. The rupee rallied 2.8 percent to 63.4950 per dollar, according to prices from local banks compiled by Bloomberg. Thailand’s baht rose 1.2 percent to 31.850, the Philippine peso gained 1.4 percent to 43.87 and Malaysia’s ringgit appreciated 1.2 percent to 3.29.

Global funds pumped $5.7 billion into the stock markets of India, Indonesia, the Philippines, South Korea, Taiwan and Thailand this week, according to exchange data. Brent crude declined 2.9 percent since Sept. 6 as concern the U.S. would strike Syria eased.

Improving Sentiment

“Risk sentiment is improving from its bottom and that was positive for emerging markets in general,” said Tohru Nishihama, an economist covering developing markets at Dai-ichi Life Research Institute Inc. in Tokyo. “Countries with strong or better economic fundamentals are benefiting the most.”

U.S. policy makers are set to meet Sept. 17-18 to review policy. The Fed will probably start tapering bond buying in September, according to 65 percent of economists in an Aug. 9-13 survey by Bloomberg. Employers in the world’s largest economy added 169,000 workers last month, less than the median forecast of economists of 180,000, last week’s report showed.

The rupee, which touched a record low of 68.845 per dollar on Aug. 28, completed its best week since October 2009 after Reserve Bank of India Governor Raghuram Rajan, who took office on Sept. 4, announced plans to strengthen the financial industry and boost dollar supply. India’s factory output climbed 2.6 percent in July from a year earlier after a revised 1.8 percent decline in June, a report showed Sept. 12.

Baht, Peso

The baht had its biggest weekly gain in five months after global funds increased holdings of the nation’s assets. Overseas investors pumped a net $381 million into Thai debt this week through Sept. 12, according to the Thai Bond Market Association.

The peso posted its largest five-day rally since June 2012 after the central bank held its benchmark rate at a record low of 3.5 percent on Sept. 12. Inflation in Southeast Asia’s fastest-growing major economy eased to a four-year low in August.

Elsewhere in Asia, South Korea’s won strengthened 0.6 percent this week to 1,086.88 and China’s yuan was little changed at 6.1188. Indonesia’s rupiah dropped for a fifth week, falling 2.1 percent to 11,410 and Vietnam’s dong climbed 0.2 percent to 21,115. In Taipei, where markets are open today, the local dollar climbed 0.5 percent for the week and 0.4 percent for the day to NT$29.739 per greenback as of 9:38 a.m.

To contact the reporter on this story: 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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