BLBG:Won Leads Gains in Asian Currencies as Yen Rebounds Before G-20
South Korea’s won led gains in Asian currencies this week amid speculation the region’s policy makers will refrain from reining in exchange rates as the yen rebounded before a meeting of the Group of 20 nations.
The Bloomberg-JPMorgan Asia Dollar Index headed for the first weekly advance in a month as a draft statement obtained by Bloomberg News showed G-20 leaders, who gather in Moscow today, will reaffirm a pledge to avoid competitive devaluation. The gauge touched a three-month low on Feb. 12 after Ha Sung Keun, a Bank of Korea board member, said Jan. 28 that a global currency war seems to be breaking out as monetary easing in Japan drags the yen lower. South Korea competes with Japan in the world market for electronics and autos. Markets in China and Taiwan were closed this week for the Lunar New Year holiday.
“We are unlikely to see any strong action from Korea or other Asian central banks before the G-20 meeting,” said Roy Teo, a currency strategist at ABN Amro Bank NV in Singapore. “The impact of yen weakness on Asian economies is likely to be relatively muted” because of the rise of China as one of the top markets for the region’s exports, he said.
The won strengthened 1.7 percent this week to 1,077.80 per dollar as of 12:31 p.m. in Seoul, according to data compiled by Bloomberg. The Philippine peso rose 0.2 percent to 40.605 and Malaysia’s ringgit added 0.1 percent to 3.0975. The Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed 0.2 percent, poised for the first five-day advance since the period ended Jan. 18.
The yen gained 0.4 percent to 92.52 per dollar from yesterday, extending its advance since Feb. 11 to 1.9 percent.
Korea Rates
The won touched the highest level this month after the Bank of Korea kept its benchmark interest rate unchanged for a fourth month yesterday, maintaining the yield advantage on local assets over developed nations. The bank’s policy rate of 2.75 percent compares with a maximum of 0.25 percent in the U.S. and 0.1 percent in Japan.
The ringgit appreciated for a second week as reports showed Japan’s economy unexpectedly shrank and the euro-area recession deepened, increasing the appeal of Malaysian assets.
The Southeast Asian economy grew 5.5 percent last quarter from a year earlier, after expanding 5.2 percent in the previous three months, according to a Bloomberg News survey before data due Feb. 20. Japan’s gross domestic product shrank an annualized 0.4 percent in the fourth quarter, while the euro-area’s GDP fell 0.6 percent from previous three months, according to official data released in Tokyo and Luxembourg yesterday.
Intervention Concern
Thailand’s baht was set for a second weekly decline amid concern the central bank will seek to halt appreciation that may hurt exporters. The currency slid 0.2 percent this week to 29.86 per dollar.
The baht advanced 2.5 percent against the dollar this year, the best performance in Asia, as global funds pumped more than $5 billion into local sovereign debt and stocks, according to official data. The currency has started to stabilize after strengthening earlier in 2013, Bank of Thailand Governor Prasarn Trairatvorakul said yesterday. The central bank is ready to act “if the baht is distorted,” he said Jan. 31.
“There’s been some correction in the baht after quite a sharp rally this year, while intervention concern remains,” said Tsutomu Soma, manager of the investment trust and fixed- income business unit at Rakuten Securities Inc. in Tokyo. “Funds will continue to flow into Asia where growth is solid.”
Elsewhere, Indonesia’s rupiah dropped 0.1 percent to 9,674 per dollar. The rupee depreciated 0.7 percent to 53.885.
To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net
