Asian Currencies Have Biggest Weekly Gain Since March on InflowsKyoungwha Kim
Asian currencies had their biggest weekly gain in more than four months as an uneven recovery in the U.S. increased bets the Federal Reserve will delay raising interest rates, boosting demand for riskier assets.
Global investors pumped $1.3 billion into six Asian emerging stock markets tracked by Bloomberg this week. U.S. retail sales were little changed in July, the worst performance in six months, while jobless claims came in at 311,000 last week, higher than the 295,000 median forecast in a Bloomberg survey. In Russia, President Vladimir Putin said Aug. 14 that his nation will do all it can to end the Ukraine conflict.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent this week, the most since the five days ended March 28. Malaysia’s ringgit gained 1.7 percent to 3.1537 per dollar, South Korea’s won advanced 1.5 percent to 1,020.93 as of Aug. 14 and the Philippine peso strengthened 1.1 percent to 43.665, data compiled by Bloomberg show. Financial markets in Korea and India were shut yesterday.
“We had a confluence of supportive factors,” said Dariusz Kowalczyk, a Credit Agricole CIB strategist in Hong Kong. The U.S. data reduced “fears of capital outflows from Asia back to the U.S. market. Tensions between Russia and Ukraine have eased, which is supportive for all emerging markets.”
The ringgit had its biggest weekly gain since September 2013 and rose 0.8 percent yesterday as data showed Malaysia’s economy expanded 6.4 percent in the second quarter, the most since 2012.
In Seoul, the Bank of Korea cut its seven-day repurchase rate to 2.25 percent from 2.5 percent on Aug. 14, the first reduction since May 2013. After the decision, the won touched 1,020.72, the strongest level since July 15.
China’s yuan rose to a five-month high yesterday on speculation the central bank is allowing more gains. Yuan positions at Chinese financial institutions accumulated from foreign-exchange purchases, a barometer of fund flows, climbed 37.8 billion yuan ($6.1 billion) in July from a month earlier. They fell in June after rising by the least in nine months in May. That indicates a “very low level” of intervention by the PBOC, according to Credit Agricole CIB.
The Chinese currency rose 0.10 percent to 6.1470 per dollar in Shanghai yesterday, extending this week’s advance to 0.16 percent, China Foreign Exchange Trade System prices show.
The peso had its biggest weekly advance since May on speculation the central bank will raise borrowing costs again to cool inflation. Consumer prices rose 4.9 percent in July from a year earlier, the most since October 2011.
“Expectations that inflation will continue to accelerate this quarter supports the view of BSP’s tightening bias,” said Steven Reyes, head of trading at Rizal Commercial Banking Corp. in Manila.
Indonesia’s rupiah advanced 0.9 percent this week to 11,675 per dollar, according to prices from local banks. The currency was steady yesterday after data showed the nation’s current-account deficit widened to near a record last quarter.
Elsewhere in Asia, Thailand’s baht rallied 0.8 percent this week to 31.852 against the greenback. Taiwan’s dollar strengthened 0.1 percent to NT$30.035, India’s rupee climbed 0.6 percent to 60.7687 yesterday and Vietnam’s dong rose 0.1 percent to 21,200.