Asian currencies strengthen for a second week

Updated: 2011-09-05 07:51

By Khalid Qayum (China Daily)

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SINGAPORE - Asian currencies strengthened for a second week, led by South Korea's won and Malaysia's ringgit, as optimism that the global economic recovery is intact bolstered demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index touched a two-week high and the region's stocks completed a second weekly advance as global investors pumped more than $1.6 billion into equities in South Korea and Taiwan. India's economy expanded faster than economists estimated and South Korea's current-account surplus rose to a nine-month high, separate reports showed last week.

"When concerns over the global economy and volatility ease, money comes back to Asia," said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp in Bangkok.

The won appreciated 1.8 percent this week to 1,063.02 against the dollar in Seoul, according to data compiled by Bloomberg. Malaysia's ringgit gained 0.8 percent to 2.948 and the Philippine peso rose 0.7 percent to 42.145. India's rupee strengthened 0.8 percent to 45.805.

South Korea's current-account surplus increased to $4.94 billion in July, the most since October 2010, an official report showed on Aug 29. India's gross domestic product gained 7.7 percent last quarter from a year earlier, beating the median estimate of 7.6 percent in a Bloomberg survey of economists.

Orders placed with US factories rose 2.4 percent in July, the most in four months, a Commerce Department report showed on Aug 31. In China, the Purchasing Managers' Index, a measure of manufacturing output, rose to 50.9 in August from 50.7 a month earlier, the China Federation of Logistics and Purchasing said. A reading above 50 signals expansion.

The won had its biggest weekly gain in five months as faster inflation fanned speculation policymakers will tolerate currency gains. Consumer prices rose 5.3 percent from a year earlier last month after increasing 4.7 percent in July, the government said on Sept 1.

The currency snapped a five-day advance before a US jobs report that was forecast to show hiring in the world's biggest economy slowed in August. Payrolls were unchanged, the weakest reading since September 2010, the US Labor Department said in Washington.

"There's a perception that recent currency gains were a bit too much," said Han Sung Min, a foreign-exchange dealer at Busan Bank in Seoul.

The ringgit completed its biggest weekly gain since July. It advanced 0.6 percent from its Aug 29 close, the prior day of trading before local financial markets closed for a three-day holiday that ended Sept 1.

Foreign investors boosted investments in Malaysia's local-currency debt by 1.1 percent in July to 186.5 billion ringgit ($62.8 billion), according to data published by the central bank on its website. Their holdings of government bonds increased 4.1 percent, the figures showed.

"The market continues to look at US and European data for signals and, on balance, it's still not conclusive we are going to get a global recession," said Wong Kah Guan, a currency forwards trader at CIMB Investment Bank Bhd in Kuala Lumpur. "Asian central banks may keep policy rates on hold and not cut so soon", preserving the yield advantage on regional assets, he said.

Bloomberg News

(China Daily 09/05/2011 page14)