Asian Currency Gains Led by Ringgit as Rupee Climbs on Election

Malaysia’s ringgit led an advance among Asian currencies this week amid the fastest economic growth in a year. India’s rupee extended its stretch of gains after the clearest election verdict in three decades.

Southeast Asia’s third-biggest economy expanded 6.2 percent in the first quarter, while the inflation rate eased in April from the highest level in almost three years, reports showed this month. Prime Minister designate Narendra Modi’s Bharatiya Janata Party won India’s first single-party majority since 1984 in national elections, spurring optimism the new government will introduce reforms to revive economic growth.

Malaysia’s economic and inflation data are “painting quite a strong domestic backdrop,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. “In India, it’s been a carry-on from the election euphoria.”

The ringgit advanced 0.7 percent for the week to 3.2115 per dollar at the close yesterday in Kuala Lumpur, data compiled by Bloomberg show. The rupee strengthened 0.5 percent in a fourth weekly gain, the longest stretch since February 2013, to 58.5075 in Mumbai.

The Philippine peso and Taiwan dollar also gained this week, while the remaining six of Asia’s 10 most-active currencies fell or were little changed. The Bloomberg-JPMorgan Asia Dollar Index dropped 0.1 percent to 115.96.

Malaysia Swaps

Malaysia’s gross domestic product rose 6.2 percent in the first quarter from a year earlier, beating the median estimate of economists in a Bloomberg News survey for a 5.7 percent increase, official data showed May 16. Consumer prices climbed 3.4 percent in April, slowing from 3.5 percent in March and February, the quickest pace since June 2011, according to a May 21 report.

One-year interest-rate swaps climbed two basis points, or 0.02 percentage point, to 3.62 percent this week, indicating investors expect the central bank to increase the benchmark overnight policy rate from 3 percent.

India’s BJP won 282 of the 543 parliamentary seats in the election, more than the 272 majority needed to form an independent government without coalition partners, May 16 results showed. Global funds bought $3.8 billion more Indian stocks and bonds than they sold this month through May 22, exchange data show.

Thailand’s baht rose to within 0.2 percent of its level prior to the May 22 coup on optimism a military takeover will bring stability after six months of political unrest. The currency gained as much as 0.4 percent to 32.46 per dollar yesterday, after trading at 32.40 immediately prior to the army takeover. It fell 0.2 percent for the week to 32.56.

Thai Coup

“We view the current military coup as likely overall positive as it creates a more stable environment,” Mark Mobius, who oversees about $50 billion as Templeton Emerging Markets Group’s executive chairman, said by e-mail. “The prognosis for Thailand is good given that direct foreign investors want stability in the country.”

Elsewhere in Asia this week, Taiwan’s dollar climbed 0.1 percent to NT$30.180 against the greenback and the Philippine peso rose 0.2 percent to 43.665. Indonesia’s rupiah declined 1.7 percent, the biggest five-day drop this year, to 11,615. South Korea’s won fell 0.1 percent to 1,024.75 and China’s yuan lost 0.05 percent to 6.2365. The Vietnamese dong gained 0.1 percent to 21,148.

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