Asian Currencies Gain as Global Stimulus Boosts Stock Inflows

Asian currencies strengthened, approaching a four-month high, as global stimulus measures boosted inflows into emerging-market stocks.

The Bank of Japan increased its asset-purchase fund to 55 trillion yen ($696 billion) from 45 trillion yen, according to a statement released in Tokyo today, less than a week after the Federal Reserve announced a third round of quantitative easing. The European Central bank unveiled an unlimited bond-purchase program this month to reduce interest rates for struggling euro-area nations. Foreign funds pumped $700 million into Indonesian, Taiwanese and South Korean shares yesterday, exchange data show.

“The open-ended quantitative easing policies will push liquidity into Asian currencies,” said Patrick Ella, an economist at Security Bank Corp. in Manila. “There’s been some occasional market pullback, but overall equity inflows have been strong.”

The Philippine peso closed 0.3 percent stronger at 41.622 per dollar, according to data compiled by Bloomberg. South Korea’s won and Thailand’s baht also rose 0.3 percent to 1,114.70 and 30.78, respectively. China’s yuan climbed 0.14 percent to 6.3098.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, advanced 0.2 percent to 116.85 today, extending its gain this month to 1.2 percent. The gauge reached 117.02 on Sept. 17, the highest level since May 2. The MCSI Asia Pacific Index of shares snapped a two-day drop, rising 0.5 percent.

Negative Rates

The peso halted a two-day decline and traded near the strongest level since 2008 ahead of a central bank report today that will show a fourth month of surplus in the Philippine’s balance of payments in August, according to Security Bank Corp. Standard Chartered Plc said in research note today the U.S. quantitative easing program is a “net positive” for inflows for Asian currencies.

The won reversed earlier losses and approached a six-month high after the Bank of Japan announcement. The Kospi index of stocks rose for a second day.

BoJ Governor Masaaki Shirakawa said the monetary authority will abandon minimum yields for 1.8 trillion yen of monthly government-bond purchases conducted separately from the stimulus fund, opening the door to the potential for negative rates.

“With shares gaining on the BOJ announcement, sentiment in the currency market also improved, supporting the won,” said Byeon Ji Young, a Seoul-based currency analyst at Woori Futures Inc. “Japan’s easing measures triggered cross trades of selling the yen and buying the won.”

Elsewhere, Taiwan’s dollar appreciated 0.2 percent to NT$29.405 versus its U.S. counterpart and Malaysia’s ringgit strengthened 0.3 percent to 3.0575. Indonesia’s rupiah fell 0.4 percent to 9,544 and Vietnam’s dong slipped 0.1 percent to 20,875. Financial markets in India are closed today for a holiday.

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