BLBG:Asian Currencies Gain in Week as Europe Officials Act to Stem Debt Crisis
Asian currencies headed for their first weekly advance in a month, led by Malaysia’s ringgit, as optimism European officials will contain the region’s debt crisis helped revive demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.3 percent this week as the European Central Bank outlined plans to pump cash into the debt-ridden economy. The ringgit and Taiwan’s dollar gained before reports today that economists predict will show export growth accelerated. Global funds bought a total $403 million more of South Korean, Taiwanese and Thai shares than they sold yesterday, exchange data show.
“Markets appear to have taken it positively that the ECB provided extraordinary liquidity measures at its policy meeting yesterday,” said Nick Verdi, a Singapore-based currency strategist at Barclays Capital. “We have very positive fundamental views on a number of Asian currencies. Given the risks emanating from Europe which will persist in the near term, the volatility isn’t likely to fall.”
The ringgit gained 0.9 percent this week to 3.1668 per dollar as of 10:12 a.m. in Kuala Lumpur, snapping four weeks of declines, according to data compiled by Bloomberg. The Philippine peso gained 0.4 percent to 43.542 and Taiwan’s dollar appreciated 0.2 percent to NT$30.552. South Korea’s won jumped 1.1 percent today to 1,178.73, taking the week’s advance to 0.1 percent.
Malaysian exports climbed 7.9 percent in August from a year earlier, faster than the 7.1 percent increase the previous month, according to the median estimate of economists surveyed by Bloomberg News. Shipments from Taiwan probably rose 9.6 percent in September, after gaining 7.2 percent in the prior period, a separate survey showed.
‘Ongoing Uncertainty’
The MSCI Asia-Pacific Index of shares advanced for a second day after ECB President Jean-Claude Trichet said yesterday the monetary authority would reintroduce purchases of covered bonds and offer banks additional unlimited loans to support markets. Europe’s policy makers left the benchmark interest rate unchanged at 1.5 percent.
A U.S. Labor Department report today may show companies in the world’s largest economy hired 55,000 workers in September compared with zero new jobs the previous month, according to the median estimate of economists surveyed by Bloomberg.
“The ECB’s plan to boost liquidity allayed concern in the market,” said Jeon Seung Ji, a currency analyst at Samsung Futures Inc. in Seoul. “The ongoing uncertainty about Greece and the U.S. unemployment data due today will make it difficult for investors to take strong positions.”
The baht strengthened 0.4 percent today and 0.5 percent this week to 30.94 per dollar in Bangkok, according to data compiled by Bloomberg.
Asian Intervention
Asian currencies appreciated this week after authorities intervened in the foreign-exchange market to curb exchange-rate losses. Taiwan’s dollar had its worst month in September since 1997, prompting central bank Governor Perng Fai-nan to say on Oct. 5 policy makers don’t favor a weaker currency.
Data this week showed currency reserves in Taiwan fell by a record $11.2 billion last month, while Korea’s stockpile shrank by the most in three years, indicating central banks sold dollars to support local currencies. Indonesian holdings dropped $10 billion last month from a record $124.6 billion in August, the bank reported yesterday.
Curbing Volatility
Bank Indonesia will continue to purchase government debt to stabilize the rupiah, Hendar, the central bank’s director of monetary policy, said in a mobile-phone text message on Oct. 3. Thailand’s central bank also said this week it entered the market to curb volatility. Policy makers intervene by buying or selling currencies to try and influence exchange rates.
“Some Asian central banks, not just Thailand, seem to have been intervening and that should also support currencies in the region,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp. in Bangkok.
Indonesia’s rupiah declined 0.9 percent to 8,970 per dollar in Jakarta, according to prices from local banks compiled by Bloomberg. It dropped 2 percent this week, extending last month’s 2.9 percent loss, which was the biggest since February 2009. Markets in China are shut this week for the National Day holidays.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net;
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net
