Asian Currencies Advance in Week on Global Stimulus Speculation
Asian currencies gained this week on signs policy makers in Europe and the U.S. will increase efforts to revive growth, boosting fund flows into emerging-market assets.
Many U.S. policy makers favored a new large-scale asset- purchase program to “provide additional support for the economic recovery,” according to minutes from the Federal Reserve’s latest meeting released this week. German Chancellor Angela Merkel said Aug. 23 that her country and France will coordinate on their approach to keep pressure on Greece to overhaul its economy. Stock markets in South Korea and Taiwan attracted a total $916 million of foreign capital this week through Aug. 24, exchange data show.
“There are some positive signs coming from Greece, and the Fed said further easing may be warranted soon,” said Choong Yin Pheng, senior manager for fixed income and economic research at Hong Leong Bank Bhd. (HLBK) in Kuala Lumpur. “This is keeping risk currencies supported.”
The Bloomberg-JPMorgan Asia Dollar Index rose 0.2 percent this week to 115.39 in Hong Kong, the biggest advance since the five-day period ended Aug. 3. The ringgit climbed 1 percent since Aug. 17 to 3.1018 per dollar, according to data compiled by Bloomberg. Thailand’s baht gained 0.9 percent to 31.24, while the Philippine peso appreciated 0.6 percent to 42.167. India’s rupee advanced 0.5 percent to 55.4950 in Mumbai.
The baht completed its biggest weekly gain since February after a report showed the economy expanded more than economists estimated in the second quarter. Gross domestic product increased 4.2 percent from a year earlier, beating the 3.1 percent gain forecast in a Bloomberg survey, according to official figures released on Aug. 20.
“The stronger GDP data was additional support for the baht this week amid not-so-bad risk sentiment due to some monetary stimulus speculation,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo.
The peso had its best week in more than a month after the government said it plans to increase spending to spur growth. Finance Secretary Cesar Purisima said Aug. 23 that last month’s budget deficit was within expectations and the government has fiscal space to pump prime the economy.
South Korea’s won and the ringgit weakened yesterday after Federal Reserve Bank of St. Louis President James Bullard said Aug. 23 that recent signs of improvement in the economy would prompt him to oppose any new Fed program to buy bonds.
China’s yuan rose 0.06 percent this week to 6.3545, headed for a fourth week of strengthening, the longest run of gains since April 2011. The currency weakened yesterday as central bank governor Zhou Xiaochuan said the country still faces relatively big pressure on economic growth, according to a statement posted on the central bank’s website. A preliminary reading on China’s manufacturing fell to 47.8 in August, compared with July’s final 49.3 figure, data showed Aug. 23.
“The manufacturing data demonstrate the growth outlook isn’t bright,” said Stella Lee, president of Success Futures & Foreign Exchange Ltd. in Hong Kong. “That’ll continue to weigh on the yuan unless China has more decisive actions.”
Elsewhere, Indonesia’s rupiah was unchanged from Aug. 17 at 9,528 and Taiwan’s dollar strengthened 0.1 percent this week to NT$30.002, respectively. The Singapore dollar gained 0.2 percent to S$1.2497 and the Korean won was little changed at 1,134.15. Vietnam’s dong fell 0.1 percent to 20,875.
-- With assistance from Yumi Teso in Bangkok, Fion Li in Hong Kong, Elffie Chew in Kuala Lumpur, Jeanette Rodrigues in Mumbai. Editors: Anil Varma, Amit Prakash