BLBG:Asian Currencies Gain, Led By Peso, On Global Easing Optimism
Asian currencies strengthened, led by the Philippine peso and South Korea’s won, on speculation central banks in the world’s biggest economies will ease monetary policies to spur growth.
The peso advanced for a sixth day, the longest winning streak since February, and the won traded near an eight-week high. The European Central Bank will cut its benchmark interest rate at a July 5 meeting, according to 51 of 62 forecasts in a Bloomberg survey. Speculation the Federal Reserve will act was boosted by data yesterday that showed U.S. manufacturing shrank for the first time since July 2009. China should cut banks’ reserve-requirement ratios, the state-run China Securities Journal said today in a front-page commentary.
“Expectations that the ECB may act to boost the economy are supporting the won,” said Byeon Ji Young, a currency analyst at Woori Futures Co. in Seoul. “The weak U.S. manufacturing data isn’t weighing on sentiment that much as it also raises speculation about the Federal Reserve’s policies.”
The peso strengthened 0.5 percent to 41.82 per dollar as of 10:55 a.m. in Manila, according to data compiled by Bloomberg. The won strengthened 0.3 percent to 1,142.20, while Taiwan’s dollar advanced 0.1 percent to NT$29.876.
Weakening Trade
The Institute for Supply Management’s index of U.S. manufacturing fell to 49.7, worse than the most-pessimistic forecast in a Bloomberg survey, from 53.5 in May. Figures below 50 signal contraction. In China, gauges tracking factory output dropped to seven-month lows as overseas orders fell.
“The world economy has stumbled, with trade especially weakening into June and local production held back by high inventories,” Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc wrote in a note to clients today. Monetary stimulus is needed while there’s lots more China can do “to ratchet things up,” the report said.
China’s yuan declined 0.06 percent to 6.3524 per dollar in Shanghai. The central bank weakened its fixing rate by 0.05 percent to 6.3178. Trade figures next week are forecast to show export growth slowed to 10.1 percent in June from 15.3 percent in May, based on the median estimate in a Bloomberg survey.
“China is likely to hold yuan appreciation to help exports as it hopes to safeguard economic growth,” said Stella Lee, president of Success Futures & Foreign Exchanges Ltd. in Hong Kong.
Elsewhere, Malaysia’s ringgit declined 0.05 percent to 3.1627 per dollar and Indonesia’s rupiah fell 0.5 percent to 9,428. The Vietnamese dong gained 0.5 percent to 20,785 and Thailand’s baht rose 0.2 percent to 31.55.
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Jiyeun Lee in Seoul at jlee1029@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
