Asian Currencies Gain as Economic Outlook for Region Improves

Asian Currencies Gain as Economic Outlook for Region Improves
Euro, yen, and U.S. dollar banknotes of various denominations are arranged for a photograph. Photographer: Kiyoshi Ota/Bloomberg

Asian currencies had their first weekly gain in a month, led by the Philippine peso, on optimism regional economic growth is starting to pick up.

A preliminary Chinese manufacturing index released Nov. 22 indicated output may have expanded for the first time in 13 months, while data on Nov. 20 showed Taiwanese export orders climbed more than estimated in October. Malaysia reported Nov. 16 that gross domestic product rose 5.2 percent in the third quarter, compared with the 4.8 percent increase forecast in a Bloomberg survey.

“Growth momentum in Asia is clearly taking off,” said Enrico Tanuwidjaja, an economist at Royal Bank of Scotland Group Plc in Singapore. “We have seen some slowing down but not a collapse. That’s why Asian currencies are supported.”

The Bloomberg-JPMorgan Asia Dollar Index rose 0.2 percent in the past five days after declining for the previous three weeks. The peso strengthened 0.7 percent this week to 41.052 per dollar, South Korea’s won appreciated 0.6 percent to 1,086.11 and Malaysia’s ringgit climbed 0.5 percent to 3.0590. China’s yuan gained 0.11 percent to 6.2285.

Overseas investors pumped a net $625 million into Thai, Philippine and South Korean stocks this week through Nov. 22, exchange data show.

“Funds continue to come into Asia, which supports regional currencies,” said Kozo Hasegawa, a Bangkok-based foreign-exchange trader at Sumitomo Mitsui Banking Corp. “Data out of China are improving, providing some relief to investors to buy emerging-market assets.”

‘Herd Behavior’

The peso approached the strongest level since March 2008 yesterday after central bank Assistant Governor Cyd Amador told reporters in Manila Nov. 22 the monetary authority has allowed some appreciation in the currency as it sees “very strong’’ overseas remittances and inflows into business-process outsourcing. The bank will maintain an orderly foreign-exchange market, while keeping a flexible exchange-rate policy, she said.

The won pared its weekly advance, falling for a third day, as concern the government will act to stem currency gains offset optimism the Chinese economy is recovering.

South Korean Deputy Finance Minister Choi Jong Ku said Nov. 22 there is “herd behavior” in the currency market and the government will take action to curb excessive fluctuations. The won has rallied 6.1 percent against the dollar this year.

“There’s risk appetite in the market with data from China, but caution against government intervention will restrict won gains,” said Kim Dong Young, a Seoul-based currency dealer for Industrial Bank of Korea.

Elsewhere, Thailand’s baht rose 0.2 percent this week to 30.69 per dollar and Indonesia’s rupiah fell 0.3 percent to 9,655. Taiwan’s dollar strengthened 0.4 percent to NT$29.171, India’s rupee lost 0.6 percent to 55.5150 and Vietnam’s dong was little changed at 20,853.

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