BLBG:Asian Currencies Set For Weekly Advance On Stimulus Speculation
Asian currencies rose this week, led by India’s rupee, as foreign funds increased holdings of emerging-market assets amid speculation global central banks will ease monetary policy to spur growth.
China’s export growth declined to 1 percent in July, data released today, compared with a median estimate of economists in a Bloomberg survey for an 11.3 percent gain. Inflation in the world’s second-largest economy was 1.8 percent last month, the least in 30 months, a report showed yesterday. Germany backed this week European Central Bank President Mario Draghi’s plan to start a bond-buying program to tackle the region’s debt crisis.
“Asian currencies continue to gain ground against the dollar, pricing in a higher probability that the Federal Reserve and ECB will satisfy expectations for further significant monetary easing,” said Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia. (BNS) “Slower inflation definitely does add to speculation of easing in China.”
The rupee strengthened 0.7 percent this week to 55.395 per dollar as of 9:21 a.m. in Mumbai, according to data compiled by Bloomberg. South Korea’s won rose 0.5 percent since Aug. 3 to 1,128.88, Malaysia’s ringgit advanced 0.6 percent to 3.1085, and the Thai baht gained 0.2 percent to 31.49. China’s yuan appreciated 0.11 percent to 6.3656.
The Bloomberg-JPMorgan Asia Dollar Index touched 115.73 yesterday, the highest level since May 15. The gauge lost 0.1 percent this week. Global funds pumped more than $4 billion into stocks in South Korea, Taiwan, Thailand and Indonesia in the first four days of this week, exchange data show.
Bond Inflows
Emerging-market debt funds attracted inflows of $720 million in the week ended Aug. 9, Morgan Stanley said in a report, citing data from U.S.-based research firm EPFR Global.
The rupee was set for its biggest weekly gain in six weeks amid speculation the nation’s new finance minister will announce measures to narrow the budget deficit and attract investment.
Palaniappan Chidambaram, in his first speech after taking office, said on Aug. 6 that he will unveil steps for fiscal consolidation and clarify tax laws. Disinvestment Secretary Mohammad Haleem Khan said on Aug. 8 the government may start its asset-sale program next month to boost revenue. India plans to narrow its budget shortfall to 5.1 percent of gross domestic product from 5.8 percent the previous year, according to estimates released in March.
Malaysian Exports
Malaysia’s ringgit headed for a second weekly advance after trade data released Aug. 8 boosted optimism the Southeast Asian nation’s economy will withstand the global slowdown.
Exports rose 5.4 percent in June from a year earlier, exceeding economists’ estimates for a 3.1 percent increase, the data showed. Factory output gained 3.7 percent in the same month, its 11th straight month of expansion, government figures showed yesterday.
“The Malaysian data was generally positive, and that should feed into a fairly robust GDP growth outcome,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) in Singapore. “We’re seeing money coming back into Asia, with the prospect of fresh stimulus from the major economies.”
Elsewhere, Taiwan’s dollar rose 0.2 percent this week to NT$29.944 against its U.S. counterpart, Indonesia’s rupiah and the Philippine peso slipped 0.1 percent to 9,480 and 41.890, respectively. Vietnam’s dong was little changed at 20,855.
To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.
