Monday April 2, 2012

Asian currencies complete quarterly gain

Shanghai: Asian currencies rose this quarter, led by India’s rupee and the ringgit, as the world’s fastest economic growth attracted funds to regional assets.

Stock markets in South Korea, India and Taiwan together attracted some US$24bil of overseas funds this year, exchange data show. Asia’s developing economies will expand 7.3% this year, outpacing growth of 3.6% in Latin America and 1.8% in the United States, according to International Monetary Fund projections published in January. The euro-area is forecast to contract 0.5%.

The rupee strengthened 4.3% this quarter to 50.88 per dollar in Mumbai, the best performance since mid-2009, according to data compiled by Bloomberg.

The ringgit climbed 3.7% to 3.0598, the biggest gain since the third quarter of 2010. The Thai baht rose 2.3% to 30.85, after sliding 1.5% in the fourth quarter of 2011 as the nation’s worst floods in almost 70 years shut factories.

“Funds are flowing into this region, supporting currencies,” said Kozo Hasegawa, a Bangkok-based trader at Sumitomo Mitsui Banking Corp. “The pace of appreciation may not be so fast for the baht next quarter as companies may need to buy the dollar to purchase machines destroyed by the floods.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed 1.5% this quarter, the biggest gain since December 2010.

The MSCI Asia-Pacific Index of shares rose 11%.

In Malaysia, overseas investors bought RM1.3bil more of local shares than they sold in January and a net RM200mil in February, exchange data show.

The economy is forecast to grow as much as 5% this year after expanding 5.1% in 2011, the central bank said in its annual report released on March 21.

“The ringgit is in demand because of portfolio inflows, a sign that the Malaysian economy will be able to sustain growth,” said Calbert Loh, the Kuala Lumpur-based head of treasury at Bangkok Bank Bhd. “The currency is on a strengthening trend and could test 3.03 to the dollar in the near term.”

International investors poured a net US$2.7bil into Thai equities this year and US$9.9bil into government debt, according to data from the stock exchange and the Thai Bond Market Association.

Gross domestic product will rise between 5% and 6% this year, the Finance Ministry said this week. The US$319bil economy expanded 0.1% last year, the least since 2009, amid the flooding. — Bloomberg

The won had a second quarterly advance as Bank of Korea official Kim Young Bae said in Seoul that GDP would increase more than forecast in the first quarter.

The won strengthened 1.7% since December to 1,133.10 per dollar, according to data compiled by Bloomberg.

Global investors bought US$9.6bil more of South Korean shares than they sold since Dec 31, the biggest net inflows since September 2009, exchange data show.

“The won is likely to strengthen further as the economic recovery gathers pace from later in the second quarter,” said Kim Sung Soon, chief currency dealer at state-run Industrial Bank of Korea in Seoul. “Net foreign buying of stocks is also providing good support for the won.”

The Philippine peso rallied this quarter by the most since September 2010 as speculation the nation will receive a credit-rating upgrade buoyed demand for Philippine assets. Assistant governor Cyd Amador said on March 29 that the central bank was seeing “modest, manageable” inflation and a pause in the current cycle of interest rate cuts was “on the table”.

“There are no more rate cuts in the offing and to that effect it is positive for the currency,” said Radhika Rao, an economist at Forecast Pte in Singapore. “They are not going to narrow the rate differential over the dollar any further. Inflows will remain positive.”

The peso advanced 2.2% this quarter to 42.92 per dollar in Manila.

Elsewhere, China’s yuan weakened 0.06% this quarter to 6.2980 per dollar and Taiwan’s dollar gained 2.6% to NT$29.530. Indonesia’s rupiah fell 1.1% to 9,165, a third quarterly loss. — Bloomberg

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