BLBG:Asian Currencies Near Two-Week High On Fed Stimulus Speculation
Asian currencies traded near the highest level in almost two weeks on speculation the Federal Reserve will announce fresh stimulus measures to shore up growth in the world’s largest economy.
The Federal Open Market Committee will begin a two-day policy meeting today after data in the past week showed U.S. retail sales fell for a second month in May and consumer prices dropped the most in three years. South Korea’s won, China’s yuan, Taiwan’s dollar and Malaysia’s ringgit were all little changed before leaders from the Group of 20 nations finish a two-day meeting in Mexico to address Europe’s debt crisis and the global economic slowdown.
“Any signs that the Fed is trying to provide a bit of stimulus will be much-wanted relief,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd.
The Singapore dollar rose 0.3 percent to S$1.2684 per dollar as of 10:21 a.m. local time, according to data compiled by Bloomberg. Thailand’s baht appreciated 0.1 percent to 31.45. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, gained 0.1 percent to 114.73. The gauge touched 114.89 yesterday, the highest level since June 7.
Thailand’s baht approached the strongest level in almost a month on speculation exporters are converting overseas profits. A government report this week may show overseas sales increased 0.65 percent in May from a year earlier after a decline of 3.67 percent the previous month, according to the median forecast of economists in a Bloomberg News survey.
Spanish Borrowing Costs
“The baht seems to be getting some support from companies repatriating overseas profits,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Sentiment itself remains fragile as Europe’s debt problems still persist.”
The won halted a four-day advance as borrowing costs in Spain climbed to a euro-area record, offsetting optimism that Greece’s election will ease the region’s debt crisis. The South Korean currency was steady at 1,157.36 per dollar after falling as much as 0.3 percent earlier.
Spain’s 10-year yield climbed to as much as 7.29 percent yesterday, the most since the euro was introduced in 1999. Greece’s pro-bailout parties won enough seats in the weekend election to put together a majority coalition, according to final results released yesterday. German Chancellor Angela Merkel said in a statement at the Group of 20 summit that Greece shouldn’t be granted leeway on terms for its bailout. The Kospi Index fell from its highest level in a month.
“Positive market reactions following the Greek elections ended in a day, and concerns surrounding Spain and Italy are mounting,” said Yun Se Min, a Seoul-based currency trader for Busan Bank. “The won will move in a tight range today after weakening to around 1,160.”
Elsewhere, Indonesia’s rupiah slid 0.8 percent to 9,461 per dollar and the Philippine peso weakened 0.2 percent to 42.335. Vietnam’s dong gained 0.1 percent to 20,945.
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@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
