Won Leads Gains in Asia on Growth as Baht Slumps Most Since 2007David Yong
South Korea’s won led gains in Asian currencies this week after economic growth exceeded forecasts. The Thai baht completed its worst five days in six years amid speculation of currency control measures.
The won advanced to a four-week high as South Korea’s gross domestic product increased 0.9 percent last quarter, beating the median estimate in a Bloomberg survey for a rise of 0.7 percent. Reports showed the U.K. economy avoided a triple-dip recession and U.S. jobless claims fell last week, raising optimism about the strength of a global recovery. China’s yuan reached a 19-year high on signs capital inflows are rising.
“Some of the risk premium in the won is being unwound, plus the good data that was a surprise,” said Leo Chan, head of regional foreign-exchange and interest-rate trading in Hong Kong at ABN Amro Bank NV. “We are also seeing people offering a lot of dollars with the stronger yuan fix.”
The won strengthened 0.4 percent to 1,112.01 per dollar in Seoul from April 19, according to data compiled by Bloomberg. The yuan gained 0.2 percent to 6.1650, capping a nine-week rally. Taiwan’s dollar climbed 0.5 percent to NT$29.705. The baht lost 2 percent to 29.24, its worst week since January 2007, and India’s rupee weakened 0.7 percent to 54.375.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, advanced
0.1 percent from April 19. It gained 0.6 percent in the previous two weeks.
The yuan touched 6.1616 per dollar yesterday, the strongest level since the government unified the official and market exchange rates at the end of 1993, after the People’s Bank of China raised its fixing by 0.15 percent to 6.2208. The nation’s financial and capital-account surplus was $101.8 billion in the first quarter, the most since 2010 and almost double the $56.1 billion for the same period of 2012, official data showed.
“Pressure for yuan appreciation is growing as China’s surplus jumped,” said Daniel Chan, a Hong Kong-based executive vice president at Glory Sky Global Markets Ltd. “Fund inflows have been strong and that’s boosting the exchange rate.”
The baht slumped after Permanent Secretary for Finance Areepong Bhoocha-oom said in Bangkok yesterday the ministry may “adjust conditions on the purchase of government bonds,” without providing details. Foreign investors were net buyers of $12 billion of Thai sovereign debt this year, fanning the currency’s rally to a 16-year high on April 19.
Prime Minister Yingluck Shinawatra called a meeting on the baht, the Thai language Krungthep Turakij newspaper reported yesterday, without saying where it got the information.
“Because of the rhetoric, the market is on the lookout for possible controls” on capital flows, said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “If anything, those will be mild measures aimed to slow inflows rather than to stem the inflows altogether.”
Elsewhere in Asia this week, the Philippine peso lost 0.4 percent to 41.222 per dollar after the central bank cut the rate it pays on special-deposit accounts for the third time in 2013. Indonesia’s rupiah dropped 0.1 percent to 9,721, while Vietnam’s dong slipped 0.2 percent to 20,930.