Asian currencies had their biggest weekly gain of the year, led by the Philippine peso and Thailand’s baht, as upbeat economic data fanned speculation interest rates will be raised to counter inflation.
The Bloomberg-JPMorgan Asia Dollar Index climbed after the Philippines and Taiwan announced faster economic growth than economists forecast this week, with the Southeast Asian nation also reporting a higher-than-expected inflation rate. Exports and consumer prices gained more than forecast in South Korea and Indonesia, while overseas sales in Malaysia also exceeded projections, separate data showed. Bank Indonesia unexpectedly raised interest rates today for the first time in two years.
“Asian economic growth is very solid and they are in an environment allowing central banks to boost rates to fight inflation,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The trend of Asian currency appreciation is still intact.”
The Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, climbed 0.6 percent this week to 116.49 as of 4:21 p.m. in Hong Kong. The peso advanced 0.8 percent to 43.765 per dollar, the baht strengthened 0.9 percent to 30.78 and Indonesia’s rupiah rose 0.4 percent to 8,995. Financial markets in China, Taiwan and South Korea were shut most of this week for the Chinese New Year holidays.
The peso had a second weekly gain as a government report today showed consumer prices climbed 3.5 percent in January from a year earlier, the most in four months and more than the median 3.3 percent gain forecast in a Bloomberg survey of economists. The central bank will consider the data when it reviews interest rates on Feb. 10, Governor Amando Tetangco said today. Gross domestic product rose 7.3 percent in 2010, the fastest growth since 1976, the government reported Jan. 31.
“The market is gauging how inflation threats will feed into the benchmark overnight rates,” said Bunny Bernardo-Recto, vice president for treasury at Chinatrust (Phils.) Commercial Bank Inc.
Indonesia’s rupiah reached its strongest level in four weeks after Bank Indonesia boosted its reference rate by a quarter of a percentage point to 6.75 percent. The move was predicted by six of 22 economists surveyed by Bloomberg before the announcement, with the rest having forecast no change. Inflation in Southeast Asia’s biggest economy accelerated to a 21-month high of 7.02 percent in January, official figures show.
India’s rupee strengthened 0.4 percent this week to 45.60 per dollar. The statistics office will predict economic growth of 8.6 percent on Monday, according to the median estimate of economists surveyed by Bloomberg ahead of a Feb. 7 announcement. A Feb. 1 report showed exports climbed 36.4 percent in December from a year earlier, the biggest increase since March.
Consumer-price gains in South Korea accelerated to 4.1 percent in January from a year earlier, the fastest pace since October, a report showed this week. President Lee Myung Bak a month ago called for “a war on inflation” and the central bank last month boosted borrowing costs for the third time since June. The Korean won fell 0.3 percent to close at 1,116.95 per dollar on Feb. 1, the last trading day this week.
Financial markets in Singapore and Malaysia were shut for the Lunar New Year holidays on Feb. 3 and Feb. 4. The Singapore dollar strengthened 0.6 percent to S$1.2734 per dollar before the break, according to data compiled by Bloomberg. Malaysia’s ringgit added 0.5 percent to 3.04 over the same period.