BLBG:Korean Won Leads Gains In Asian Currencies On Stimulus Optimism
South Korea’s won led gains among Asian currencies after international investors boosted holdings of the region’s assets amid speculation central banks in major economies will act to spur growth.
Minutes from the Bank of Japan (8301) showed today that policy makers weren’t ruling out any options to boost the economy, the biggest export market for the Philippines and the second-largest for Thailand. The MSCI (MXAP) Asia Pacific Index of stocks gained after demand rose at an Italian debt auction yesterday, damping concern Europe’s debt crisis will worsen. Global funds pumped almost $6 billion into the stock markets of India, South Korea, Taiwan and Thailand this month, according to exchange data.
“Financial markets have been quite stable recently, making it easier for investors to take some risks,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Speculation has been lingering about monetary easing by central banks in major economies, which also encouraged some fund inflows to emerging markets.”
The won added 0.2 percent to 1,128.90 per dollar as of 12:05 p.m. in Seoul, according to data compiled by Bloomberg. Taiwan’s dollar also rose 0.2 percent to NT$29.954 and Thailand’s baht advanced 0.1 percent from Aug. 10 to 31.45. Onshore financial markets were closed in Thailand yesterday for a public holiday.
Most other regional currencies were little changed as the Bloomberg-JPMorgan Asia Dollar Index held steady at 115.44. It touched 115.73 on Aug. 9, the highest level since May 15.
‘Not Game-Changing’
Federal Reserve Bank of San Francisco President John Williams said the central bank should begin a third round of bond purchases amid signs U.S. growth is slowing, the San Francisco Chronicle reported on Aug. 10. Germany last week backed a European Central Bank bond-buying plan that may alleviate the region’s debt problems.
Italy sold 8 billion euros ($9.9 billion) of Treasury bills at an auction yesterday, with investors bidding for 1.69 times the amount offered, compared with 1.55 times last month.
The won snapped a two-day loss as the benchmark Kospi (KOSPI) index of stocks rose 0.7 percent.
“There are some foreign inflows into the stock market that are supporting the won,” said David Kang, a currency analyst at Woori Futures Inc. in Seoul. “There is some small positive news on Italy, but it’s not a game-changing situation.”
Improving Sentiment
Taiwan’s dollar rose for the first time in three days before data that’s forecast to show U.S. retail sales increased 0.3 percent last month, the first gain since March, according to a Bloomberg survey, easing concern a recovery in the world’s largest economy is losing momentum.
“Foreign funds have been piling into Taiwanese stocks as they see attractive valuations,” said Tarsicio Tong, a foreign- exchange trader at Union Bank of Taiwan. (2838) The fund flows and improved sentiment are supporting the currency, he said.
Indonesia’s rupiah fell on speculation measures announced last week will do little to narrow the nation’s widest current- account deficit in at least five years. The currency declined 0.2 percent to 9,500 per dollar.
Bank Indonesia said on Aug. 10 it was allowing overseas investors to hedge their foreign-exchange transactions for as short as one week and raised the minimum deposit facility rate by 25 basis points to 4 percent to help curb the shortfall. The current-account deficit widened to $6.9 billion in the second quarter from $2.9 billion in the previous three months, official data show.
“In the near term, it’s hard to see the current-account deficit narrowing significantly,” said Irene Cheung, a currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Singapore. “We are bearish on the rupiah.”
Elsewhere, the Philippine peso and Malaysia’s ringgit were little changed against the dollar at 41.933 and 3.1219, respectively. The Chinese yuan held steady at 6.3631 while Vietnam’s dong traded at 20,853 from 20,850 yesterday.
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; Andrea Wong in Taipei at awong268@bloomberg.net
To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net
