BLBG:Asian Currencies Gain This Week As China Easing Boosts Optimism
Asian currencies gained this week for the first time since April after China reduced borrowing costs, raising optimism a possible increase in spending in the world’s second-largest economy will boost regional exports.
India’s rupee snapped a nine-week loss after the government announced measures to revive growth and on speculation the central bank will cut interest rates on June 18 after first- quarter gross domestic product rose the least in nine years. Policy makers in South Korea kept the seven-day repurchase rate at 3.25 percent today, noting the downside risks from Europe’s credit crisis.
“The rate cut is positive because it signals that China has the scope to take more measures to cushion the economic slowdown,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “The outlook for Asian economies is still cloudy because the global situation, especially in Europe, is still one of muddling along.”
Malaysia’s ringgit and the rupee led gains this week, strengthening 0.9 percent and 0.7 percent to 3.1820 and 55.2050, respectively, as of 11:44 a.m. in Singapore, according to data compiled by Bloomberg. The Philippine peso gained 0.4 percent to 43.202 and South Korea’s won rose 0.3 percent to 1,173.93.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, rose 0.3 percent to 114.26 this week. The gauge declined in each of the last five weeks, the longest losing streak since 2008.
Fed Comments
Asian currencies pared their weekly advance today after Federal Reserve Chairman Ben S. Bernanke played down speculation of further monetary stimulus. The MSCI Asia-Pacific Index (MXAP) of regional shares dropped 1.2 percent, halting a three-day rally.
Bernanke told lawmakers yesterday the central bank has options to take further measures, and said the Fed will need to assess economic conditions before deciding if a third round of so-called quantitative easing is needed.
“There are still jitters on the global front and at best the U.S. wants to keep the QE3 possibility vague for now,” said Enrico Tanuwidjaja, a Singapore-based senior currency analyst at Malayan Banking Bhd.
Overseas investors sold $550 million more shares than they bought in Indonesia, South Korea, Taiwan and Thailand this week, exchange data show. China is due to report data on factory output and consumer prices over the weekend.
The People’s Bank of China cut its one-year lending and deposit rates to 6.31 percent and 3.25 percent, respectively. The yuan was little changed at 6.3687 per dollar, compared with 6.3635 yesterday and 6.3690 a week ago.
“The market expects some bad data out of China and currencies of export-driven economies like Thailand will be affected,” Tanuwidjaja said.
The baht declined 0.8 percent to 31.80 per dollar, the biggest loss since March, paring a weekly advance to 0.3 percent.
Elsewhere, Indonesia’s rupiah gained 0.7 percent this week to 9,465 per dollar, while Taiwan’s dollar was little changed at NT$29.928. The Vietnamese dong fell 0.6 percent to 20,993.
To contact the reporters on this story: Andrea Wong in Taipei at awong268@bloomberg.net; Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
