BLBG:Asian Currencies Gain On Global Stimulus Bet; Peso Leads Rally
Asian currencies were headed for a second weekly advance on speculation leaders of the Group of 20 nations will announce measures to combat a global economic slump when they meet next week for talks in Mexico.
The Bloomberg-JPMorgan Asia Dollar Index climbed 0.2 percent after Bank of England Governor Mervyn King said yesterday that the case for more stimulus in the U.K. “is growing” as Europe’s debt crisis worsens. U.S. data showed consumer prices dropped in May by the most in three years, giving the Federal Reserve room for more monetary stimulus before a policy meeting next week. The Philippine peso led Asian currency gains as the government sought improved credit ratings and exports rose more than economists forecast.
“Global policy makers are more proactive and the market is hoping for some kind of bazooka from the Federal Reserve or the G20 summit next week,” said Roy Teo, a currency strategist in Singapore at ABN Amro Private Bank. “That could stimulate economic confidence and activities.”
The peso strengthened 2.1 percent this week to 42.37 per dollar as of 11:15 a.m. in Manila, according to Tullett Prebon Plc. South Korea’s won climbed 1 percent to 1,164.00, Thailand’s baht rose 0.5 percent to 31.54 and Malaysia’s ringgit advanced 0.4 percent to 3.1742.
The MSCI Asia-Pacific Index of stocks rose 1.9 percent this week. The Fed holds its open-market committee meeting on June 19-20, while G-20 leaders gather for a summit on June 18-19. Spain’s credit rating was slashed three levels by Moody’s Investors Service this week after the nation sought a 100 billion euros ($126 billion) bailout for its banks and Greece will hold a June 17 election that may determine whether it stays in the euro.
Fund Inflows
“If Europe’s crisis worsens, that will adversely impact other nations and central banks in the developed nations will take action to support their economies,” said Yuji Kameoka, chief currency strategist at Daiwa Securities Co. in Tokyo.
The Asia Dollar Index, which tracks the region’s 10 most- used currencies excluding the yen, has rebounded 0.7 percent since touching 113.68 on June 1, the lowest level since September 2010.
Emerging-market stock funds had $920 million of inflows this week, while bond funds attracted $361 million, according to reports published by Citigroup Inc. and Morgan Stanley that cited data from EPFR Global.
Peso Rally
The peso rallied after Finance Secretary Cesar Purisima asked rating companies on June 13 to upgrade the nation’s junk- grade status and Standard Chartered Plc said yesterday it expects the Philippines to have an investment-grade rating by 2014. A government report yesterday showed exports increased 7.6 percent in April from a year earlier, after shrinking 0.8 percent in March.
“There’s a lot of hope on the upgrade,” said Andy Ji, a strategist in Singapore at Commonwealth Bank of Australia. “The fiscal situation is good and the macro outlook is positive.”
Central banks in the Philippines, South Korea, Thailand and Indonesia kept their benchmark interest rates on hold this month, while China on June 8 lowered its borrowing costs for the first time in four years. Exports from Asia’s largest economy increased 15.3 percent in May from a year earlier, exceeding all 29 estimates in a Bloomberg survey of economists, data showed June 10.
Yuan Fixing
The yuan appreciated 0.1 percent from yesterday and a week ago to 6.3639 per dollar. The central bank fixed its reference rate today at 6.3089, 0.97 percent stronger than yesterday’s closing level. The currency is allowed to fluctuate no more than 1 percent from the daily fixing and the strengthening of the reference rate may help curb criticism of the nation’s exchange rate at the G-20 talks.
“The fixing is China’s pre-emptive move to ease any pressure on appreciation at the G-20 meetings,” said Stella Lee, president of Success Futures & Foreign Exchange Ltd. in Hong Kong.
The U.S. contends that China is keeping the yuan artificially weak to boost exports and calls for appreciation are heating up as President Barack Obama prepares for a November election. Germany will call attention to a number of issues including China’s exchange rate at the G-20 talks, two German government officials said in Berlin on June 12.
Elsewhere among Asian currencies, Taiwan’s dollar advanced 0.3 percent this week to NT$29.903 versus the greenback. India’s rupee fell 0.4 percent to 55.6975, while Indonesia’s rupiah was little changed at 9,469. Vietnam’s dong gained 0.2 percent to 20,958.
To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net.
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
