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Asian Currencies Gain as Europe Deal Revitalizes Equities Demand

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July 2 (Bloomberg) -- Thailand’s baht and Indonesia’s rupiah led gains among Asian currencies as Europe’s progress on solving its debt crisis revitalized demand for regional stocks.

Overseas investors bought more equities than they sold in Indonesia, the Philippines, Taiwan and Thailand on June 29 after European officials relaxed conditions on bailout loans for Spain and said banks can be recapitalized directly. The MSCI Asia-Pacific Index of shares added to last week’s biggest rally since January. China’s manufacturing expanded in June, while analysts had forecast a contraction, according to data issued yesterday.

“The market has reacted positively to the good news out of the European summit, but the concern over growth remains,” Nizam Idris, head of Asian fixed income and currencies at Macquarie Bank Ltd. in Singapore, said in an e-mail. “To some extent, one can say the Chinese Purchasing Manager’s Index numbers were better than feared, but the general direction of travel in terms of global growth remains on the downside.”

The baht rose 0.5 percent to 31.58 per dollar as of 3:47 p.m. in Bangkok, according to data compiled by Bloomberg. The rupiah rose 0.5 percent to 9,386 and the peso appreciated 0.3 percent to 42.018. Most Asian currencies fell last quarter as the financial crisis in Europe cut demand for regional exports and raised concern global economic growth is slowing.

Indonesia’s overseas shipments fell for a second month, shrinking 8.5 percent in May from a year earlier, figures showed today. India’s rupee slid 0.1 percent to 55.7150 as data showed exports dropped 4.2 percent.

China Boost

The Chinese yuan rose to a one-month high. The Purchasing Managers’ Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. That compared with the 49.9 median estimate of analysts in a Bloomberg News survey. A reading above 50 indicates expansion.

The yuan advanced 0.08 percent to 6.3490 per dollar and earlier touched 6.3461, its strongest level since May 29. It slid 0.88 percent last quarter, its worst performance since a peg to the U.S. currency ended in 2005.

“People generally think domestic activity bottomed out in the second quarter,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “The PMI is a little piece of evidence of that. The yuan may resume its appreciation trend again.”

South Korea’s won traded near an eight-week high after a surge in the trade surplus to $4.96 billion, the most since October 2010. The currency slid 0.1 percent to 1,146.04 at the close in Seoul on speculation importers are buying the dollar to settle bills.

“The large trade surplus and the European summit results will have a considerably positive effect on the won during the beginning of the week,” said Kim Doo Hyun, chief currency trader at Korea Exchange Bank in Seoul.

Elsewhere, Malaysia’s ringgit appreciated 0.2 percent to 3.1637 and the Taiwanese dollar was little changed at NT$29.905. The Vietnamese slid 0.1 percent to 20,895.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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