BLBG:Yuan Leads Gain in Asian Currencies on U.S. GDP, Chinese Data
The yuan led gains in Asian currencies after U.S. and Chinese economic data suggested global growth is picking up, boosting demand for riskier assets.
Gross domestic product in the world’s biggest economy rose at a 2 percent annual rate in the third quarter, faster than the 1.8 percent median estimate in a Bloomberg News survey, official figures showed Oct. 26. The net income of Chinese industrial companies rose 7.8 percent in September from a year earlier, the first increase in six months, according to a report released Oct. 27 in Beijing.
“The U.S. economic improvement is supportive of regional assets,” said Koji Fukaya, president of currency research and consulting company Office Fukaya in Tokyo and a former chief foreign-exchange strategist at Credit Suisse Group AG. “This makes it easier for investors to take risks.”
The yuan gained 0.18 percent to 6.2376 per dollar as of 11:39 a.m. in Shanghai, touching a 19-year high earlier, according to the China Foreign Exchange Trade System. Thailand’s baht strengthened 0.2 percent to 30.70 and South Korea’s won appreciated 0.1 percent to 1,096.20. The Bloomberg-JPMorgan Asia Dollar Index touched 117.84 today, near the 117.93 level reached on Oct. 25 that was the highest since Feb. 29.
Yuan positions at local lenders accumulated from sales of foreign exchange to the central bank, an indicator of investment inflows, rose 130.7 billion yuan ($21 billion) to 25.77 trillion yuan in September, after two months of declines, according to official data released Oct. 19. Reports this month showed a pickup in retail sales, manufacturing and exports, while the Chinese currency has rallied 2 percent since the end of July.
‘Renewed Confidence’
“This round of appreciation reflects the renewed confidence that the economy is recovering,” said Nizam Idris, head of Asian fixed income and foreign-exchange at Macquarie Bank Ltd. in Singapore. “If you look at the new banking sector foreign-exchange purchases, numbers are suggesting inflows are returning,” said Idris, adding that he forecast the yuan would end the year at a similar level to where it is today.
The baht touched a three-week high after official data last week showed Thai exports rose 0.2 percent in September from a year earlier, compared with the median forecast in a Bloomberg survey for a 2.7 percent drop, and a 7 percent slide in August.
The won reached a 13-month high as the Kospi (KOSPI) Index of shares rebounded from a 1.7 percent decline on Oct. 26. South Korean government reports this week will show industrial production increased in September by the most in three months, and exports decreased 0.5 percent in October from a year earlier after a 2 percent drop the previous month, according to Bloomberg surveys.
Korean Intervention Speculation
“The U.S. data was positive, supporting risk-on sentiment, and there are expectations South Korean exporters will sell the dollar as the month-end nears,” said Jeon Seung Ji, a Seoul- based currency analyst at Samsung Futures Inc. “Still, there is speculation the government intervened last week to stem the won’s gains, so there will be caution against fast appreciation.”
Elsewhere, Taiwan’s dollar rose 0.1 percent to NT$29.258 against its U.S. counterpart. Indonesia’s rupiah declined 0.2 percent to 9,628, Malaysia’s ringgit lost 0.3 percent to 3.0524 and the Philippine peso fell 0.1 percent to 41.245.
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
