BLBG: Asian Currencies Rise, Led by Rupiah, Won, as Recession Eases
Asian currencies rose, led by the Indonesian rupiah and South Korea’s won, as optimism a global recession is easing bolstered demand for emerging-market assets.
The Asian Dollar Index, which tracks the region’s 10 most- active currencies outside of Japan, climbed for a fourth day and global stocks rallied after the U.S. Federal Reserve said the pace of contraction slowed in several of the nation’s biggest regional economies last month. Data today showed China’s economy grew at the slowest pace in almost a decade in the first quarter, which economists estimate was a low-point for the world’s third- biggest economy.
“Equities are important as a barometer of sentiment” for Asian currencies, said Patrick Bennett, Asia’s rates and currency strategist with Societe Generale in Hong Kong. “China’s GDP is after all a historical number. Indicators are showing recovery, that is the important fact.”
The rupiah strengthened 1.6 percent to 10,725 per dollar as of 10:14 a.m. in Jakarta and the won rose 0.6 percent to 1,330.30, approaching a three-month high. The Asian Dollar Index gained 0.1 percent and the MSCI Asia Pacific index of regional shares climbed 2.1 percent, wiping out its losses for 2009.
China’s economy expanded 6.1 percent in the first quarter from a year earlier, after a 6.8 percent gain in the final quarter of 2008, the statistics bureau said in Beijing today. Growth will accelerate to 7.5 percent this quarter, according to the median forecast of economists surveyed by Bloomberg News.
Five of 12 Fed district banks “noted a moderation in the pace of decline,” the U.S. central bank said yesterday in its Beige Book business survey, published two weeks before officials meet in Washington to set monetary policy.
Fund Inflows
Investors pumped more money into emerging-market equities for a fifth straight week, adding $2.2 billion net through April 8 as they sought higher returns, according to Cambridge, Massachusetts-based EPFR Global, a research company that tracks $11 trillion of funds.
The Korean currency extended its gain for the past month to 7.2 percent. Overseas investors bought more Korean shares than they sold today, helping lift the Kospi stock Index 1.7 percent.
“The movements in the currency market are a simple reflection of stock moves these days,” said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul. “Exporters are willing to settle deals on the dollar’s highs, while there’s demand for the greenback from dividend payments.”
‘Huge Success’
China’s non-deliverable forwards showed the yuan will rise to 6.7435 per dollar in a year, compared with 6.8314 in the spot market, after the release of first-quarter growth. Today’s report coincides with a statement from U.S. Treasury Secretary Timothy Geithner that China isn’t a currency manipulator.
China’s economy shows signs that Premier Wen Jiabao’s 4 trillion yuan ($585 billion) stimulus plan is working, fueling a surge in bank lending and spurring the Shanghai Composite Index to an eight-month high. Growth in investment and industrial output accelerated in March and incomes grew in the first quarter, today’s report showed.
“Retail sales and fixed asset investments are growing very fast, a huge success of the government in a quick implementation of fiscal stimulus,” said Dairusz Kowalczyk, a currency strategist with SJS Markets Ltd. in Hong Kong.
Taiwan’s dollar rose versus the greenback on speculation moves to strengthen ties with mainland China will bolster overseas demand for the island’s goods and help draw investment.
Vice President Vincent Siew said yesterday that Taiwan should sign an agreement with China to normalize economic ties. The island’s currency gained 0.2 percent to NT$33.714 per dollar.
‘Stimulus Efforts’
Malaysia’s ringgit rose to a one-week high of 3.5829 versus the greenback before trading 0.5 percent higher at 3.5900 in Kuala Lumpur.
“Investors are getting back their confidence because all those stimulus efforts may already be showing early results,” said Irwaan Iskandar Abrahim, who helps manage $134 million at ASM Investment Services Bhd. in Kuala Lumpur. “That should support stocks and the ringgit.”
Elsewhere, the Singapore dollar rose 0.2 percent to S$1.4988 against the U.S. currency and the Philippine peso climbed 0.3 percent to 47.68. The Thai baht was little changed at 35.38 in Bangkok, from 35.39 late yesterday in offshore trading. Markets in Thailand were closed over the last three days for the Thai New Year holiday, known as Songkran.
