BLBG:Asian Currencies Halt Advance as Recent Gains Judged Excessive
Asian currencies halted a five-day advance as some investors judged recent gains as excessive and after data showed economic growth slowed for a seventh quarter in China, the region’s biggest export market.
The Bloomberg-JPMorgan Asia Dollar Index’s 14-day relative- strength index was at 72 today, above the 70 level that indicates to some traders that a decline is likely. The gauge rallied 2.2 percent so far in the second half of 2012. Asia’s biggest economy expanded 7.4 percent in the third quarter from a year earlier, official figures showed today, after growing 7.6 percent in the previous three months. China is the biggest buyer of goods shipped from South Korea, Taiwan and Thailand.
“Technically, some consolidation is necessary for Asian currencies after their recent rallies,” said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc. in Tokyo. “There remains concern about China’s slowdown and with that, it’s hard for investors to aggressively buy riskier assets.”
The Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, was little changed at 117.81 as of 10:57 a.m. in Hong Kong from 117.85 yesterday. The measure touched 117.87 yesterday, the highest level since February. India’s rupee fell 0.4 percent to 53.10 per dollar, the Philippine peso dropped 0.3 percent to 41.285 and the Indonesian rupiah declined 0.1 percent to 9,586, according to data compiled by Bloomberg.
China’s yuan halted a two-day rally that sent it to a 19- year high of 6.2525 per dollar yesterday, falling 0.02 percent to 6.2556, according to China Foreign Exchange Trade System.
China Outlook
Premier Wen Jiabao said China is confident of achieving annual economic targets as growth has started to stabilize, the official Xinhua News Agency reported yesterday.
“Wen’s remarks are supportive of the yuan but data have yet to show a strong rebound in growth,” said Kenix Lai, a Hong Kong-based foreign-exchange analyst at Bank of East Asia Ltd. (23)
The peso retreated from the strongest level in more than four years on speculation importers stepped up dollar purchases to take advantage a more favorable exchange rate.
The peso opened at 41.12 per dollar, the highest level since March 2008. It advanced 6.1 percent this year, the second- best performance among the 11 most-active Asian currencies, as foreign funds bought $1.9 billion more local equities than they sold, according to exchange data.
Support for Dollar
“The 41.00 to 41.20 range appears to be a support level” for the dollar versus the peso, said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO) “This level is a sweet spot for importers.” A support is a level on a price chart that analysts predict will act as a floor in a declining market.
The rupiah fell on speculation companies stepped up dollar purchases to meet overseas payment obligations.
“The rupiah has room to strengthen on capital inflows but strong domestic dollar demand will put the currency under pressure,” said Nurul Eti Nurbaeti, the head of treasury research at PT Bank Negara Indonesia in Jakarta.
Elsewhere, Malaysia’s ringgit depreciated 0.1 percent to 3.0350 per dollar while Thailand’s baht held steady against at 30.61. South Korea’s won and Taiwan’s dollar rose 0.1 percent to 1,105.00 and NT$29.211, respectively.
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
