Asian currencies rose, led by South Korea’s won and the Indian rupee, on speculation global policy makers will announce stimulus measures to spur economic growth and tackle Europe’s debt crisis.
China delayed plans to tighten bank capital rules, freeing up funds for lending, and Indian Prime Minister Manmohan Singh pledged infrastructure spending to revive expansion. The European Central Bank stands “ready to act” should the debt crisis damp the euro-area economy further, President Mario Draghi said yesterday. Federal Reserve Vice Chairman Janet Yellen said there is scope for “further policy accommodation.”
“The risk aversion and the flight to safety may have eased given the U.S. is likely to consider a move to add further liquidity,” said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “In the short term, if the ECB acts, it will ease market concerns and we will see Asian currencies either stabilizing or regaining some lost ground.”
The won climbed 0.7 percent from its June 5 close to 1,171.45 per dollar, according to data compiled Bloomberg. South Korea’s financial markets were shut yesterday for a holiday. The rupee rose 0.6 percent to 55.0587 and Malaysia’s ringgit advanced 0.5 percent to 3.1640. Taiwan’s dollar gained 0.1 percent to NT$29.906 and Thailand’s baht weakened 0.1 percent to 31.51.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, reached 114.70, the highest level in more than a week. The gauge declined in each of the last five weeks, its longest losing streak since 2008, as Europe’s debt crisis worsened and Chinese data pointed to a deepening slowdown in Asia’s biggest economy.
“Governments are rolling out measures to save their economies,” said Tobby Lin, a bond trader at Yuanta Securities Co. in Taipei. “It’s boosting risk appetite a bit, but concerns over Europe’s crisis still exist for sure.”
The Group of Seven nations agreed this week to coordinate their response to Europe’s turmoil, which has tipped at least eight of the 17 euro-area economies into recession and is threatening the global economy.
The yuan was unchanged at 6.3635 per dollar in Shanghai. China said it will introduce new capital-adequacy requirements for lenders at the beginning of next year, having announced in August they would start being applied from Jan. 1, 2012. The People’s Bank of China raised the reference rate 0.14 percent, the most since May 21, to 6.3170.
“China is showing its determination to support growth as it ensures there’s bank capital to support lending demand,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. That’s positive for the yuan, he said.
Elsewhere, the Philippine peso rose 0.1 percent to 43.158 per dollar. Indonesia’s rupiah weakened 1 percent to 9,398 and the Vietnamese dong held at 21,001.