BLBG: Asian Currencies Gain, Led by Won, on Rate Outlook, Drop in Crude Prices
South Korea’s won led gains in Asian currencies on speculation central banks will raise borrowing costs to tame inflation, widening the region’s yield advantage over developed economies.
The Bank of Thailand will boost its benchmark rate today and the Bank of Korea will do the same tomorrow, according to economists in separate Bloomberg surveys. The MSCI Asia-Pacific Index of regional shares snapped a two-day drop as crude prices fell for a second day, easing concern that rising energy costs will slow the global economy and stoke inflation.
“The market is looking to see some more-active monetary policy,” said Chris Gothard, the Hong Kong-based head of foreign-exchange business for Brown Brothers Harriman. “As soon as you see a little bit of easing in oil prices, that should help some of the emerging-market currencies.”
The won rose 0.3 percent to 1,114.75 per dollar as of 11:28 a.m. in Seoul and the Philippine peso advanced 0.2 percent to 43.385, according to data compiled by Bloomberg. The Taiwan dollar appreciated 0.3 percent to NT$29.344, according to Taipei Forex Inc.
Benchmark interest rates of 6.75 percent in Indonesia and 6.50 percent in India compare with a maximum of 0.25 percent in the U.S. and Japan.
The won climbed for a second day as overseas investors turned net buyers of South Korean equities for the first time this week. The Bank of Korea will raise its benchmark interest rate by 25 basis points, or 0.25 percentage point, to 3 percent at a policy meeting tomorrow, according to all 15 economists surveyed by Bloomberg News. Inflation in February breached the central bank’s 4 percent target ceiling for a second month.
Fund Inflows
“The jury is still out on whether high inflation should lead to a faster won appreciation,” said Andy Ji, a Singapore- based currency strategist at Commonwealth Bank of Australia. “But for now, it seems positive for the won as Bank of Korea is expected to move on rates tomorrow.”
The Philippine peso snapped two days of losses on speculation investors are buying emerging-market assets as the global economic recovery strengthens.
“Inflows are going to Asia and we will see the peso strengthening at a gradual rate,” said Rafael Algarra, a treasurer at Security Bank Corp. in Manila.
The baht rose for an eighth straight day as oil prices dropped 0.5 percent to $104.46 a barrel. The Bank of Thailand will lift the one-day bond repurchase rate by a quarter of a percentage point to 2.50 percent today, according to 17 of 20 economists surveyed by Bloomberg. Three predict no change. The baht added 0.2 percent to 30.32 per dollar, the strongest level since Jan. 13.
Elsewhere, Malaysia’s ringgit rose 0.1 percent to 3.0315, according to data compiled by Bloomberg. The Singapore dollar dropped 0.1 percent to S$1.2684 and the Chinese yuan declined 0.04 percent to 6.5712. Indonesia’s rupiah was unchanged at 8,788.
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
