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Asian Currencies Complete Best Week Since January on BOJ Easing

Thailand’s baht and Malaysia’s ringgit led Asian currency gains to the best week since January on speculation Japan’s monetary easing will increase the flow of funds into emerging-market assets.

The baht strengthened beyond 29 per dollar for the first time since 1997 and the ringgit appreciated for a fourth week, the longest run in 14 months. South Korea’s won rose this week after touching an eight-month low on the risk of a nuclear test or missile launch by North Korea. The Bank of Japan said April 4 it plans to buy 7.5 trillion yen ($75 billion) of bonds a month in the biggest move since its easing started in 2001.

“I expect the Bank of Japan’s plan to double its monetary base will lead to a pickup in inflows to emerging Asia,” said Khoon Goh, a Singapore-based senior strategist at Australia & New Zealand Banking Group Ltd. “Some of the outflows were likely due to concerns over tensions on the Korean peninsula.”

The baht climbed 1.1 percent from a week ago, the most since the five-day period ended Jan. 18, to 29.01 per dollar in Bangkok, according to data compiled by Bloomberg. It touched 28.88 on April 10, the strongest level since a devaluation in July 1997 that sparked the Asian financial crisis. The ringgit rose 0.6 percent to 3.04 in Kuala Lumpur this week.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies, rose 0.2 percent in the five days through yesterday, the biggest gain since January. The MSCI Asia Pacific Index of shares increased 3.3 percent.

Fund Inflows

Global funds bought $810 million more Thai sovereign debt than they sold since the BOJ’s easing announcement, Thai Bond Market Association data show. This year’s net purchases totaled $10 billion through April 11, compared with $31 billion for the whole of 2012. Overseas investors have pumped more than $12 billion into Indian stocks and fixed-income securities this year, exchange data show.

South Korean President Park Geun Hye offered to resume dialog with the North in an effort to ease tensions, her spokeswoman Lee Mi Yon said by phone yesterday. The timeframe for a North Korean missile launch is until around April 15, South Korean defense ministry spokesman Kim Min Seok said April 11. The date marks the birth anniversary of the North’s founder Kim Il Sung.

The won was little changed yesterday and gained 0.2 percent this week to 1,129.40 per dollar in Seoul, according to data compiled by Bloomberg. It touched 1,144.82 on April 9, the weakest level since July 26.

Yuan Positions

China’s yuan reached the highest level this week since the country unified official and market exchange rates at the end of 1993. Yuan positions at local financial institutions stemming from foreign-exchange transactions, a gauge of cross-border capital flows, climbed 295 billion yuan ($47 billion) in February, the central bank said on April 10.

Gross domestic product probably increased 8.1 percent in the January-March period, according to the median estimate of economists ahead of data due April 15 in Beijing. That’s more than the 7.9 percent posted in the previous quarter.

The currency rose for a seventh week, the longest winning streak since November, climbing 0.2 percent to 6.1922 per dollar in Shanghai, prices from the China Foreign Exchange Trade System show. The currency touched the 1993 high of 6.1900 yesterday.

“Capital inflows have been strong as investors see China’s economic growth remains resilient,” said Daniel Chan, a Hong Kong-based executive vice president at Glory Sky Global Markets Ltd. “A stronger exchange rate is also favorable for the government to boost domestic demand as officials are shifting the economy away from an export-dependent one.”

Malaysian Vote

Malaysia’s ringgit had a fourth weekly gain on speculation the ruling coalition will win a May 5 election and continue economic reforms. The vote will determine if Prime Minister Najib Razak’s Barisan Nasional alliance can extend its 55-year rule. Najib has embarked on a $444 billion spending spree to build railways, roads and power plants to achieve developed-nation status by 2020.

“The calling of the election, coupled with more market confidence that Najib is likely to win, has been the main driver for the week,” said Rob Ryan, a Singapore-based currency strategist at Royal Bank of Scotland Plc.

Elsewhere in Asia, Indonesia’s rupiah rose 0.3 percent from a week earlier to 9,713, India’s rupee gained 0.5 percent to 54.5250 and Vietnam’s dong climbed 0.3 percent to 20,855. The Philippine peso fell 0.3 percent to 41.265 and Taiwan’s dollar weakened 0.2 percent to NT$29.995.

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