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Asian Currencies Rise for Fourth Week on China Data, Fed Outlook

Asian currencies rose for a fourth week on signs of a pickup in Chinese manufacturing and as U.S. jobs data fueled speculation the Federal Reserve will delay cutting its record stimulus.

The Bloomberg-JPMorgan Asia Dollar Index added 0.1 percent from Oct. 18 as China’s yuan reached its strongest level in 20 years and Indonesia’s rupiah had its best week since June 2009. Malaysia’s ringgit rallied in offshore markets yesterday after the government proposed to cut its budget deficit for 2014. South Korea’s won retreated from a two-year high on suspected central bank intervention.

“There’s still scope for upside in Asian currencies,” said Choong Yin Pheng, senior manager for bond and economic research in Kuala Lumpur at Hong Leong Bank Bhd. (HLBK) “The consensus view is that we are not going to see the Fed tapering this year, and Chinese data is upbeat.”

The yuan climbed 0.2 percent from a week ago to 6.0840 per dollar in Shanghai, according to the China Foreign Exchange Trade System, appreciating for a third week. The rupiah jumped 2.8 percent to 11,015, while the Philippine peso advanced 0.1 percent to 43.035 versus the greenback.

The rupiah strengthened for a fourth week as global funds bought more Indonesian stocks than they sold in the four days through Oct. 24, the first net inflow in a month, according to exchange data. The yuan rose as high as 6.0802 per dollar yesterday, the strongest level since the government unified the official and market exchange rates at the end of 1993.

China, U.S.

China’s Purchasing Managers’ Index rose to a seven-month high of 50.9 in October from 50.2 in September, HSBC Holdings Plc and Markit Economics said in an Oct. 24 report. A weaker-than-forecast September U.S. jobs report on Oct. 22 fueled speculation the Fed will delay paring its $85 billion a month of bond purchases to March.

“The market has pushed its expectation for Fed tapering into next year,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore. Investors are looking for additional yield in emerging markets to tide them over, he said.

Malaysia plans to cut its fiscal deficit to 3.5 percent of gross domestic product in 2014 from 4 percent this year, the nation’s finance ministry said in a report. Prime Minister Najib Razak proposed yesterday a goods and services tax from April 2015 to broaden revenue base, and lower corporate and personal income taxes.

The ringgit gained 0.1 percent yesterday to 3.1566 per dollar in Kuala Lumpur and was little changed from a week ago. One-month non-deliverable forwards rallied 0.6 percent yesterday to 3.1337 per dollar.

Won Intervention

South Korea’s won fell 0.1 percent from a week ago to 1,062.06 per dollar after government officials said they would act to counter any “herd behavior.” Ryoo Sang Dai, director general at the Bank of Korea’s international department, declined to comment on Oct. 24 on whether authorities intervened in the currency market, or on the size of the suspected action.

Thailand’s baht weakened 0.1 percent to 31.089 per dollar from a week ago. Exports shrank 7.1 percent in September from a year earlier, versus a 3.9 percent gain in August, the government said. The Bank of Thailand cut its 2013 growth forecast to 3.7 percent from 4.2 percent.

Elsewhere, India’s rupee weakened 0.3 percent to 61.4600 per dollar, while Taiwan’s dollar was steady at NT$29.455. Vietnam’s dong gained 0.1 percent to 21,100.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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