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Asian Currencies Gain in Week on Recovery Optimism; Rupee Drops

South Korea’s won led a weekly advance in Asian currencies as signs of an improvement in the global economy brightened the outlook for the region’s exports and spurred demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-active currencies, rose 0.1 percent and on Oct. 18 touched its highest level since February. The won strengthened the most this month and the yuan had an 11th weekly gain, the longest winning streak since March 2008. India’s rupee fell for a second week as the government announced a pickup in inflation. Hong Kong’s dollar touched the strong end of its permitted trading range, triggering intervention to maintain the peg.

China’s factory production, retail sales and fixed-asset investment accelerated in September, reports showed Oct. 18. Retail sales in the U.S., the world’s biggest economy, increased 1.1 percent in September while housing starts climbed 15 percent to a four-year high, reports showed this week. Europe’s leaders committed to their goal of creating a euro-area bank supervisor by year-end, according to officials at a European Union summit that took place in Brussels.

“The September data was clearly stronger than expected,” said Nizam Idris, head of Asian fixed income and currencies at Macquarie Bank Ltd. in Singapore. “The growth momentum will continue. Still, we are at a very early stage of the recovery so it’s too soon to expect” faster gains in Asian currencies, including the yuan, he said.

The won appreciated 0.7 percent this week to 1,103.45 per dollar in Seoul, according to data compiled by Bloomberg. The yuan rose 0.21 percent to 6.2538, touching a 19-year high of 6.2446 on Oct. 18. Taiwan’s dollar climbed 0.3 percent to NT$29.286.

Hong Kong Peg

Hong Kong’s dollar rose 0.02 percent to HK$7.7503. The Hong Kong Monetary Authority said yesterday it bought $603 million at HK$7.75 per dollar during New York trading hours on Oct. 19, intervening for the first time since 2009 to maintain a peg that requires the exchange rate to be kept in a range of HK$7.75 to HK$7.85.

The won touched 1,102.50 on Oct. 17, the strongest level since 0ct. 31, 2011. South Korea’s economy probably expanded 1.7 percent in the third quarter from a year earlier, the least in three years, a Bloomberg survey showed before data due Oct. 26.

“The won was strong this week on positive data from the U.S., but it seems some overseas investors are covering their short positions on the dollar,” said Lee Jung Hyun, a Seoul-based currency trader for Industrial Bank of Korea. A short position is a bet an asset will decline in value.

China Outlook

The yuan has extended its rebound from this year’s low of 6.3967 on July 25 to 2.3 percent after September data indicated growth is gathering pace in the world’s second-largest economy. Factory output grew 9.2 percent from a year earlier, compared with an 8.9 percent gain in August that was the smallest in three years, official figures showed Oct. 18. Retail sales advanced 14.2 percent, the most since March, while fixed-asset investment climbed 21 percent in the first three quarters.

“We believe China’s economy has bottomed out in August or September,” said Tommy Ong, a Hong Kong-based senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd. “Improvement in global liquidity and calls for more appreciation from the U.S. presidential campaign trail are also supporting the yuan.”

The rupee fell 1.9 percent this week to 53.84 per dollar as faster inflation eroded the appeal of assets denominated in the currency. India’s benchmark price index increased 7.81 percent last month from a year earlier, the most since December, according to figures released Oct. 15.

Elsewhere, the Malaysian ringgit rose 0.1 percent this week to 3.0535 per dollar. Indonesia’s rupiah fell 0.1 percent to 9,593 from last week’s 9,588, prices from local banks compiled by Bloomberg show. The currency reached 9,657 on Oct. 11, the weakest level since October 2009. The Philippines peso appreciated 0.1 percent to 41.385. Vietnam’s dong climbed 0.1 percent to 20,843.

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