Asian currencies had a third weekly gain, led by the rupee and South Korea’s won, as signs of a global economic recovery and falling European borrowing costs boosted demand for emerging-market assets.
The won reached a six-week high as reports this week showed China’s fourth-quarter gross domestic product expanded more than forecast, remittances by Philippine citizens abroad increased at a faster pace and claims for US jobless benefits dropped to the lowest level in almost four years. Global funds poured a net $2.9 billion into South Korean and Indonesian equities this week through January 20 and $485 million into India in the first three days of the week, exchange data show.
“There’s some optimism over the US and Chinese economic conditions while Europe’s debt concern is at least not worsening,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok. “That led to some fund inflows into Asia, supporting currencies. However, Europe’s problem won’t be solved anytime soon and so sentiment may not recover sharply.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks 10 most-traded currencies in the region excluding the yen, climbed 0.6 per cent from a week ago to 116.18. The three-week run of gains is the first since June. The rupee climbed 2.4 per cent to 50.3350 per dollar, the won surged 1.3 per cent to 1,134.21 and Malaysia’s ringgit rose 0.9 per cent to 3.1042, according to data compiled by Bloomberg. The Philippine peso added 1.1 per cent to 43.263.
Won’s winning streak
The MSCI Asia-Pacific Index of shares posted its fifth weekly advance as France sold ¤¤7.97 billion euros ($10.3 billion) of debt with the average yield on the benchmark two-year notes sliding to 1.05 per cent from 1.58 per cent in October. Spain issued debt due 2022 at an average of 5.403 per cent, down from 6.975 per cent in November.
The won gained for a fourth day, its longest run of appreciation in seven weeks. Data on January 18 showed South Korea’s department store sales increased 11 per cent, the most in eight months.
“Overseas situations have supported risk appetite recently, and this trend will continue for some time, although the speed of currency gains may slow,” said Kim Doo Hyun, a Seoul-based senior currency dealer at Korea Exchange Bank.
The ringgit climbed for a third week and the rupiah jumped 1.5 per cent this week to 8,945 per dollar as Indonesia attained an investment-grade credit rating from Moody’s Investors Service on January 18.
Good data
“Risk appetite is the driving factor for Asian currencies,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd in Singapore. “Attention is more on the good data coming out of the US market, sending the focus away from the debt crisis in Europe.” The rupiah touched a two-month high yesterday after foreign funds bought $226 million more local shares than they sold in the week, exchange data show. President Susilo Bambang Yudhoyono said January 19 the government was targeting a 6.7 per cent increase in gross domestic product this year.
