BLBG:Asia Currencies Steady as U.S. Housing Data Spurs Recovery Doubt
Asian currencies were little changed as data cast doubt on the strength of the U.S. economic recovery and inflows of cash into emerging markets reached a record.
Purchases of new homes in the U.S. dropped 1.6 percent to a 313,000 annual pace last month, less than the median estimate of 325,000 in a Bloomberg News survey, a report showed on March 23. Bond funds dedicated to emerging markets received almost $14 billion in the best start to a year as of the third week of March, according to data from U.S. research company EPFR Global. The Dollar Index fell 0.5 percent on March 23 and was little changed today.
“People don’t want to be aggressively long on the dollar as there are still humps and bumps in data from the U.S.,” said Suresh Kumar Ramanathan, a Kuala Lumpur-based currency strategist at CIMB Investment Bank Bhd. A long position on the dollar profits from the currency strengthening.
The ringgit gained 0.2 percent to 3.0710 per dollar as of 10:46 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. Indonesia’s rupiah advanced 0.1 percent to 9,185 and China’s yuan added 0.06 percent to 6.3040. The Bloomberg- JPMorgan Asia Dollar Index (ADXY) was steady after gaining 0.1 percent on March 23, the biggest advance in a week. The gauge’s 60-day historical volatility was at 3.42 percent from 3.50 percent at the end of last week.
Overseas funds bought $617 million more Taiwanese, Thai and Indonesian stocks than they sold last week, according to exchange data. Taiwan’s industrial output rose in February for the first time in four months, while Malaysia’s inflation eased to a 14-month low, official data showed late last week.
Yuan Extends Gain
The yuan extended last week’s 0.24 percent gain after the People’s Bank of China set its reference rate at a record high and on speculation policy makers are preparing to widen the currency’s trading band. The daily fixing was set 0.05 percent stronger at 6.2858 per dollar, the highest since the currency was allowed to float in 2005. The yuan is allowed to move as much as 0.5 percent either side of the reference rate.
“The direction remains for a mild appreciation,” said Sacha Tihanyi, a senior currency strategist at Scotia Capital in Hong Kong. “The reference rate is at a record high but it doesn’t mean that we are not going to see a repeat of the volatility we have seen.”
South Korea’s won fell for a fifth day, weakening 0.2 percent to 1,137.25 per dollar, on speculation overseas investors are repatriating dividends paid out by local companies. Posco, the world’s third-biggest steelmaker by output, is scheduled to pay a dividend on March 28.
“Overseas investors demanding the dollar for conversion in this dividend-payout season may be countered by Korean exporters selling the greenback to repatriate income as the quarter-end nears,” said Kim Doo Hyun, a Seoul-based currency dealer at Korea Exchange Bank.
Elsewhere, Taiwan’s dollar, the Philippine peso and the Thai baht were little changed at NT$29.595, 42.960 and 30.76 against the greenback, respectively. Vietnam’s dong strengthened 0.3 percent to 20,827.
To contact the reporters on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net Elffie Chew in Kuala Lumpur at echew16@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
