Asia Currencies Rally a Third Week on Japan Stimulus, China Data

Asian currencies completed a third weekly advance as Japan’s 10.3 trillion yen ($116 billion) stimulus spending and a rebound in China’s exports improved the outlook for a global economic recovery.

The Bloomberg-JPMorgan Asia Dollar Index rose to a 16-month high as overseas sales from China, Taiwan and Malaysia grew more than analysts forecast, according to official figures released this week. Japanese Prime Minister Shinzo Abe’s fiscal package will increase gross domestic product by about 2 percentage points and create about 600,000 jobs, according to a statement released by the Cabinet Office yesterday.

“The global outlook is continuing to improve and we remain constructive on emerging markets for the year as external risks diminish,” said Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong. “The mood was boosted by the Japanese fiscal stimulus plan. We expect most regional currencies to do well.”

Malaysia’s ringgit climbed 1 percent in the past five days to 3.0218 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. South Korea’s won appreciated 0.9 percent to 1,054.69, Thailand’s baht gained 0.8 percent to 30.27 and the Philippine peso rose 0.7 percent to 40.605.

The Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.28 percent this week. The gauge touched 118.70 yesterday, the strongest level since September 2011.

Record Inflows

Emerging-market equity funds attracted their biggest-ever weekly inflows of $7.4 billion in the seven days ended Jan. 9, Jonathan Garner and Pankaj Mataney, Morgan Stanley analysts, wrote in a report yesterday. Developing-nation debt lured the second-largest inflows of $2 billion, according to the report, citing data from EPFR Global.

China, the top destination for exports from South Korea, Taiwan, Malaysia and Thailand, reported a 6 percent increase in imports for December this week, the fastest growth in six months. Exports climbed 14 percent, the most since May.

The ringgit gained for a fifth day, its longest winning streak since September, after government reports showed factory production and exports improved. Industrial output in Southeast Asia’s third-largest economy rose 7.5 percent in November from a year earlier, while overseas shipments grew 3.3 percent, both beating economists’ estimates.

New Optimism

“China trade numbers are fueling optimism global growth is picking up,” said Roy Teo, a currency strategist in Singapore at ABN Amro Bank NV. “There is new optimism and new money coming into financial markets. Risk-on may persist till the end of the month.”

South Korea’s won rose to a 17-month high after the central bank kept borrowing costs unchanged.

The Bank of Korea left its seven-day repurchase rate at 2.75 percent in a decision predicted by all but one of 14 analysts surveyed by Bloomberg. Governor Kim Choong Soo said he will closely monitor the movements of the won, the best performer of the past year among 16 major currencies tracked by Bloomberg.

“There are some signs the Korean and the global economies may have bottomed, reducing the need for an interest-rate cut,” said Kong Dong Rak, fixed-income analyst at Hanwha Investment & Securities Co. in Seoul. “The Bank of Korea already cut rates last year to help the economy and too many rate reductions could weaken the impact of a cut.”

Elsewhere in Asia, India’s rupee strengthened 0.7 percent this week to 54.6825 per dollar, according data compiled by Bloomberg. Taiwan’s currency advanced 0.3 percent to NT$29.039, while the Chinese yuan gained 0.23 percent to 6.2161. Indonesia’s rupiah rose 0.3 percent to 9,636.

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