Asian currencies strengthened, led by Malaysia’s ringgit, on optimism a resilient Chinese economy will help regional exporters weather Europe’s debt crisis and a U.S. economic slowdown. China reported today industrial production grew more than economists forecast and inflation accelerated to the fastest pace in almost three years. The world’s second-largest economy is the No. 1 export destination for South Korea, Taiwan and Thailand. Pan Jiancheng, deputy director-general of the China Economic Monitoring and Analysis Center of the National Bureau of Statistics, said a “hard landing” is unlikely, according to a China News Service report. The ringgit climbed 0.4 percent to 3.0313 per dollar as of 5 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The Singapore dollar gained 0.5 percent to S$1.2314 and South Korea’s won strengthened 0.3 percent to 1,082.60. Taiwan’s dollar and India’s rupee appreciated 0.2 percent to NT$28.85 and 44.75, respectively. “China’s demand or internally driven growth is still pretty strong,” said Jonathan Cavenagh, a Singapore-based foreign-exchange strategist at Westpac Banking Corp., Australia’s second-largest lender. “That’s positive for risk currencies.” Industrial production in Asia’s biggest economy increased 13.3 percent in May, more than the median forecast for a 13.1 percent gain in a Bloomberg survey, a government report showed today. That compared with a 13.4 percent rise in April. Inflation quickened to 5.5 percent in May, the most since July 2008, from 5.3 percent the previous month. Yuan Appreciation The Bloomberg-JPMorgan Asia Dollar Index sunk to a two-week low yesterday as signs the U.S. recovery is faltering coupled with a deepening debt crisis in Greece prompted investors to favor safer bets than emerging-market assets. Overseas investors sold $1.8 billion more Korean, Taiwanese and Thai shares than they bought this month through yesterday, according to exchange data. The index rebounded 0.2 percent today. China’s yuan strengthened on speculation authorities will allow further gains to reduce the cost of imported goods. The currency advanced 0.04 percent to 6.4803 per dollar. China’s central bank said today it will boost lenders’ reserve-requirement ratios by half a percentage point effective June 20, the sixth increase of this year. China has also boosted interest rates twice and allowed the yuan to gain 1.7 percent in 2011. “It looks like price pressures are still mounting and currency appreciation is likely to be accelerated to curb imported inflation,” said Dariusz Kowalczyk, a Hong Kong-based economist at Credit Agricole CIB. “Especially given solid data on economic activities, this should push the yuan up.” Chinese Slump Unlikely Tighter monetary conditions in China will not bring about an economic slump, HSBC Holdings Plc economists Qu Hongbin and Sun Junwei wrote in a research note released yesterday. A central bank report yesterday showing a 25 percent drop in new yuan loans in May from April “is good news for Beijing’s ongoing battle against inflation,” they wrote. Elsewhere, Indonesia’s rupiah added 0.1 percent to 8,538 per dollar, the Thai baht strengthened 0.1 percent to 30.45 and the Philippine peso declined 0.1 percent to 43.368. To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net. To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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