BLBG: Asian Currencies Set for Best Month of 2009 as Stocks Rally
Asian currencies headed for the first monthly gain since December as stocks rallied on optimism government stimulus spending will help revive regional economies and draw investors back to emerging markets.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, climbed 2.3 percent in March, trimming a loss for the quarter to 3 percent. Overseas funds bought more shares than they sold this month in South Korea, Indonesia, Taiwan and Thailand, putting the MSCI Asia Pacific Index on course for its biggest monthly advance in almost a decade. The rally in Asian currencies may be reaching a peak, according to Calyon, a unit of France’s Credit Agricole SA.
“Various currencies like the Korean won had been heavily oversold and were due for some sort of a pull back,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong. “Some equity markets rallied around 20 percent which eased risk aversion and helped capital flow back into many Asian markets.”
The Korean won traded at 1,393.25 per dollar as of 12:38 p.m. local time, according to Seoul Money Brokerage Services Ltd. It is up 10 percent in March, the best performing Asian currency. Indonesia’s rupiah trailed, rising 3.5 percent to 11,580, followed by Taiwan’s dollar, which appreciated 2.8 percent to NT$33.987.
Stocks Rebound
Stocks rebounded this month after Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. said they were profitable in the first two months of 2009. Bank of America and JPMorgan said this week that they may not have performed so well in March. U.S. Treasury Secretary Timothy Geithner said some U.S. banks will need “large amounts” of assistance.
The Standard & Poor’s 500 Index, the benchmark for U.S. stocks, advanced 21 percent in the 14 trading days ended March 27, the most over a stretch of that size since 1938, according to data compiled by New York-based S&P analyst Howard Silverblatt.
The gauge dropped 3.5 percent yesterday, trimming its March rally to 7.1 percent, after President Barack Obama’s administration warned that General Motors Corp. and Chrysler LLC have one last change to restructure.
“After Geithner said the banks need more help, there’s resumption of risk aversion and people preferred safe-haven assets again,” said David Mann, senior foreign-exchange strategist at Standard Chartered Bank. Mann predicted the Taiwan dollar, Singapore dollar, Thai baht and Malaysian ringgit will weaken further this year because their economies are “more open to the global slowdown.”
‘Extended Consolidation’
The Korean currency headed for its first monthly gain since December, paring this quarter’s loss to 9.5 percent. An improving current-account balance and rising stocks should limit declines in the won, said Roh Sang Chil, a currency dealer with Kookmin Bank in Seoul. The Kospi share index rose 0.6 percent, snapping a two-day decline.
“The foreign-exchange market is in an extended consolidation after recent bull runs,” Roh said. “Trade is shallow and sentiment is still for the won to rise over the long term.”
Indonesia’s rupiah declined today as companies bought dollars to meet month-end payments on imports and foreign debt.
The currency has dropped 6 percent this quarter, the second- biggest loss among Asia’s 10 most-active currencies excluding the yen, as a global recession caused investors to favor safer bets.
“We continue to project the rupiah to still be trading on a slightly weaker bias against the U.S. dollar,” Enrico Tanuwidjaja, an economist at Overseas Chinese Banking Corp. in Singapore, wrote yesterday in a research note. “Sustained corporate dollar demand should guard any excessive plunge in the rupiah past the 11,000 mark in the very near term.”
Elsewhere, the Philippine peso gained 0.8 percent in March to 48.412 per dollar, according to Tullet Prebon Plc. The Thai baht was at 35.54, headed for a monthly advance of 1.7 percent, according to data compiled by Bloomberg. Malaysia’s ringgit strengthened 1.5 percent for the month to 3.6465. India’s rupee dropped 0.2 percent to 51.0450 and Vietnam’s dong declined 1.7 percent to 17,775.50.
