Asia’s Currencies Have Strongest Week in Five Months as Inflows Increase
Wednesday, June 23rd, 2010South Korean won coins and bills are displayed in Seoul. Photographer: Seokyong Lee/Bloomberg
Asian currencies strengthened this week, led by South Korea’s won and the Philippine peso, as signs the global economic recovery will withstand Europe’s debt crisis boosted demand for riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index and the MSCI Asia Pacific Index of shares had their biggest gains in at least five months and the won jumped the most in a year. The Conference Board this week said its leading indicator of China’s economy rose by the most in 14 months and the Organization for Economic Cooperation and Development forecast the fastest growth for South Korea since 2002. Thailand yesterday reported its best export growth in almost two years.
“There has been optimism that the impact of Europe’s problems on the Asian economy may be limited, supporting the purchase of regional currencies,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest bank. “Gains in stocks are also a supporting factor.”
The won appreciated 3.6 percent to 1,202.65 per dollar, according to data compiled by Bloomberg. The peso climbed 1.6 percent to 45.905 and the Indian rupee was 1.4 percent stronger at 46.1787.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, gained 1.0 percent and the MSCI Asia Pacific Index of shares rose 3.3 percent. Stocks in South Korea and Taiwan attracted about $1.9 billion from abroad, according to data compiled by Bloomberg.
Stock Inflows
Equity funds investing in Asia excluding Japan took in money for the first time in six weeks, drawing the most since April, according to EPFR Global, which tracks firms overseeing $13 trillion of global assets. Emerging-market stock funds attracted $2.5 billion, the second-highest tally this year.
Korean Finance Minister Yoon Jeung Hyun said yesterday growth will likely exceed 5 percent this year and a government report showed spending at the three biggest department stores climbed for a 15th month in May. Gross domestic product will increase 5.8 percent this year as exports surge and domestic demand strengthens, the OECD said this week.
“The won has been doing pretty well because of the economic fundamentals,” said Yun Suk Cho, a currency dealer at Korea Exchange Bank in Seoul. “There is a big possibility that we will break 1,200 against the dollar next week as the markets stabilize.”
Exports, Jobs
Thailand’s exports jumped 42 percent from a year earlier in May, the most since July 2008, Commerce Minister Porntiva Nakasai said yesterday. The Philippines on June 15 raised its economic growth target for this year to as much as 6 percent, from a previous goal of 3.6 percent. Taiwan will next week report an eighth straight gain in export orders and the lowest jobless rate since 2008, according to the median estimates of economists surveyed by Bloomberg.
Taiwan’s dollar completed its biggest weekly gain in nine months as an improving economy and the prospect of a trade deal with China spurred inflows.
Gross domestic product rose at the fastest pace in more than 30 years in the last quarter and China’s government said June 13 a basic agreement has been reached with the island on goods, services and industries chosen for initial tariff cuts in the planned trade pact.
“Funds are flowing back as investors seek riskier assets,” said Tigr Cheng, a strategist at Polaris Securities Co. in Taipei. “People have been upbeat about the economy.”
The island’s currency climbed 0.8 percent this week to NT$32.190 against the greenback, according to Taipei Forex Inc.
Elsewhere, the Malaysian ringgit gained 0.8 percent to 3.2500, the Singapore dollar strengthened 1.2 percent to S$1.3864 and the Indonesian rupiah appreciated 1.2 percent to 9,096. The Thai baht rose 0.2 percent to 32.40.
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