Asian currencies advanced for a second week as Indonesia’s rupiah and South Korea’s won led a rally after weak U.S. data tempered concerns about the pace of the Federal Reserve’s stimulus cuts.
The Bloomberg JPMorgan-Asia Dollar Index (ADXY) rose 0.6 percent from Feb. 7. Sales at U.S. retailers fell in January by the most since June 2012 and the number of Americans seeking jobless benefits last week unexpectedly rose, official reports showed Feb. 13. Fed Chair Janet Yellen said the monetary authority’s bond-purchase program will be pared in “measured steps,” and that only a notable change in U.S. economic outlook would prompt a change.
“Disappointing U.S. data was taken by markets as a sign of a less hawkish Fed outlook,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, wrote in a research note yesterday. “As a result, emerging-market sentiment should be positive and currencies firm up.”
The rupiah surged 2.8 percent to 11,825 per dollar in Jakarta, according to local prices compiled by Bloomberg, and the won strengthened 1 percent to 1,063.35. Thailand’s baht added 0.6 percent through Thursday to 32.592 and local markets were shut yesterday for a holiday. The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, reached the highest level since Jan. 15.
Bond and stock outflows from Asia’s developing economies was $2.23 billion in the week to Feb. 12, versus $4.24 billion a week earlier, Australia & New Zealand Banking Group reported, citing EPFR Global data.
Indonesia’s current-account deficit shrank to the equivalent of 1.98 percent of gross domestic product last quarter, down from 3.8 percent in the preceding three months, Bank Indonesia said Feb. 13. Global funds have plowed more than $1 billion into local equities and debt this year.
India’s rupee rose 0.6 percent this week to 61.93 per dollar as reports showed inflation eased last month by more than economists estimated. The gains were pared by speculation oil importers will step up dollar purchases to repay borrowings from the central bank. Refiners will make payments for a swap facility that was introduced in August when the currency slumped to a record low.
The won capped its best week since September after data this week showed exports from China, South Korea’s biggest overseas market, increased 10.6 percent in January from a year earlier. The Bank of Korea held its benchmark rate at 2.5 percent on Feb. 13. The nation’s current-account surplus widened to a record $70.73 billion in 2013, it said last month.
“The won has come back strongly this month, aided by the more settled mood in emerging markets,” said Sean Callow, a Sydney-based currency strategist at Westpac Banking Corp. “A calmer global environment has dovetailed with the won’s strong fundamentals of a large current-account surplus.”
China’s yuan weakened to 6.0668 per dollar versus 6.0634 on Feb. 7. The central bank raised its daily fixing to 6.1070 from 6.1089 a week ago. The yuan’s 12-month non-deliverable forwards gained 0.11 percent to 6.1102 in Hong Kong.
Elsewhere, Malaysia’s ringgit advanced 0.7 percent to 3.3064 per dollar while the Philippine peso added 0.6 percent to 44.723. Taiwan’s dollar gained 0.2 percent to NT$30.347 and Vietnam’s dong was little changed at 21,100.
To contact the reporter on this story: David Yong in Singapore at email@example.com