Sept. 30,2009 -- Asian currencies strengthened this quarter, led by South Korea’s won, as signs economies are recovering from a slump spurred demand for regional assets.The Bloomberg JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, today capped its best month since March, after Japan reported a sixth straight increase in industrial output. The won rose after a central bank survey showed manufacturers’ confidence reached a two-year high and the Taiwan dollar advanced on a report the island’s trade surplus will double this year.
“The fundamentals look pretty positive for Korea,” said Gerrard Katz, head of currency trading at Standard Chartered Plc in Hong Kong. “The economy is rebounding quite strongly, so the central bank’s a little more relaxed about won strength.”
The won gained 0.7 percent to 1,178.05 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. It’s strengthened 6 percent this month, the best performance among Asia’s 10 most-traded currencies. Taiwan’s dollar advanced 0.5 percent to NT$32.20 after central bank Governor Perng Fai- nan told lawmakers in Taipei today that foreign inflows are putting “appreciation pressure” on the local currency. Shares in South Korea and Taiwan each attracted more than $4 billion from overseas this month alone, taking net purchases for the year to $19.4 billion and $11.4 billion as of yesterday. The Kospi stock index climbed 5.1 percent this month and the Taiex index jumped 10 percent.
Yield Gap
Relatively high yields also helped draw funds to the region. Bank Indonesia on Sept. 3 refrained from cutting its benchmark interest rate for the first time in 10 months, keeping it at 6.5 percent. The Philippine central bank will tomorrow keep its key rate at 4 percent, according to all 15 economists in a Bloomberg survey. Borrowing costs in the U.S. and Japan are no higher than 0.25 percent. The Asia Dollar Index rose 1.8 percent this month, taking its quarterly gain to 2.1 percent. The yen strengthened to 89.48 per dollar from 90.09 late yesterday in New York, headed for a 4 percent monthly advance.
Japan’s factory output rose 1.8 percent last month after climbing 2.1 percent in July, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News forecast a 1.8 percent increase. Chinese production expanded for a sixth month in September, a purchasing managers’ index released by HSBC Holdings Plc today showed.
‘Slow Rise’
Taiwan’s dollar advanced 2.2 percent from the end of August, its biggest monthly gain since March. The Central Bank of the Republic of China (Taiwan) today reiterated that the exchange rate should reflect economic conditions and it will act to curb excessive volatility. Policy makers can try to influence exchange rates by buying or selling foreign currency.
“The central bank report points to a slow rise of the Taiwan dollar,” said Henry Lin, a currency trader at Shin Kong Commercial Bank in Taipei. Malaysia’s ringgit strengthened, completing a second
quarterly gain, after the central bank predicted the economy will return to growth by year-end as stimulus programs revive domestic demand. Gross domestic product slid 3.9 percent from a year earlier in the second quarter, following a 6.2 percent drop in the first three months of this year.
“The market is focusing on the better economic outlook,” said Azmi Shukri Rahman, a currency trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “If merger and acquisition deals here are well received, we can expect to see more inflows supporting the ringgit.”
The currency rose 0.7 percent to 3.4605 per dollar today, extending its quarterly advance to 1.5 percent.
Growth, Politics
Indonesia’s rupiah appreciated for a second quarter as the fastest economic growth in Southeast Asia and the re-election of President Susilo Bambang Yudhoyono helped draw funds from abroad.
The currency had its best month since April as the highest interest rates among Asia’s 10 largest economies lured investors. The central bank this week maintained its forecast for the economy to expand 4 percent this year, while the Asian Development Bank last week raised its growth projection to 4.3 percent from a March estimate of 3.6 percent.
“We’ve been very positive on the Indonesian rupiah due to the positive political and macroeconomic developments which led to quite a bit of re-rating on the currency,” said Mirza Baig, a currency strategist at Deutsche Bank AG in Singapore. “Carry trades were also popular and the rupiah’s high yield relative to the region makes it attractive.”
The rupiah rose 0.7 percent to 9,660 in Jakarta, taking this quarter’s advance to 5.7 percent, according to data compiled by Bloomberg. The currency has risen 4.7 percent this month and its 13 percent gain for the year is Asia’s best performance.
Elsewhere, the Philippine peso climbed 1.6 percent this quarter to 47.365, while the Singapore dollar advanced 2.8 percent to S$1.4076. Thailand’s baht rose 1.9 percent to 33.43. China’s yuan was at 6.8263 versus 6.8307 at the end of June.
“The fundamentals look pretty positive for Korea,” said Gerrard Katz, head of currency trading at Standard Chartered Plc in Hong Kong. “The economy is rebounding quite strongly, so the central bank’s a little more relaxed about won strength.”
The won gained 0.7 percent to 1,178.05 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. It’s strengthened 6 percent this month, the best performance among Asia’s 10 most-traded currencies. Taiwan’s dollar advanced 0.5 percent to NT$32.20 after central bank Governor Perng Fai- nan told lawmakers in Taipei today that foreign inflows are putting “appreciation pressure” on the local currency. Shares in South Korea and Taiwan each attracted more than $4 billion from overseas this month alone, taking net purchases for the year to $19.4 billion and $11.4 billion as of yesterday. The Kospi stock index climbed 5.1 percent this month and the Taiex index jumped 10 percent.
Yield Gap
Relatively high yields also helped draw funds to the region. Bank Indonesia on Sept. 3 refrained from cutting its benchmark interest rate for the first time in 10 months, keeping it at 6.5 percent. The Philippine central bank will tomorrow keep its key rate at 4 percent, according to all 15 economists in a Bloomberg survey. Borrowing costs in the U.S. and Japan are no higher than 0.25 percent. The Asia Dollar Index rose 1.8 percent this month, taking its quarterly gain to 2.1 percent. The yen strengthened to 89.48 per dollar from 90.09 late yesterday in New York, headed for a 4 percent monthly advance.
Japan’s factory output rose 1.8 percent last month after climbing 2.1 percent in July, the Trade Ministry said today in Tokyo. Economists surveyed by Bloomberg News forecast a 1.8 percent increase. Chinese production expanded for a sixth month in September, a purchasing managers’ index released by HSBC Holdings Plc today showed.
‘Slow Rise’
Taiwan’s dollar advanced 2.2 percent from the end of August, its biggest monthly gain since March. The Central Bank of the Republic of China (Taiwan) today reiterated that the exchange rate should reflect economic conditions and it will act to curb excessive volatility. Policy makers can try to influence exchange rates by buying or selling foreign currency.
“The central bank report points to a slow rise of the Taiwan dollar,” said Henry Lin, a currency trader at Shin Kong Commercial Bank in Taipei. Malaysia’s ringgit strengthened, completing a second
quarterly gain, after the central bank predicted the economy will return to growth by year-end as stimulus programs revive domestic demand. Gross domestic product slid 3.9 percent from a year earlier in the second quarter, following a 6.2 percent drop in the first three months of this year.
“The market is focusing on the better economic outlook,” said Azmi Shukri Rahman, a currency trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “If merger and acquisition deals here are well received, we can expect to see more inflows supporting the ringgit.”
The currency rose 0.7 percent to 3.4605 per dollar today, extending its quarterly advance to 1.5 percent.
Growth, Politics
Indonesia’s rupiah appreciated for a second quarter as the fastest economic growth in Southeast Asia and the re-election of President Susilo Bambang Yudhoyono helped draw funds from abroad.
The currency had its best month since April as the highest interest rates among Asia’s 10 largest economies lured investors. The central bank this week maintained its forecast for the economy to expand 4 percent this year, while the Asian Development Bank last week raised its growth projection to 4.3 percent from a March estimate of 3.6 percent.
“We’ve been very positive on the Indonesian rupiah due to the positive political and macroeconomic developments which led to quite a bit of re-rating on the currency,” said Mirza Baig, a currency strategist at Deutsche Bank AG in Singapore. “Carry trades were also popular and the rupiah’s high yield relative to the region makes it attractive.”
The rupiah rose 0.7 percent to 9,660 in Jakarta, taking this quarter’s advance to 5.7 percent, according to data compiled by Bloomberg. The currency has risen 4.7 percent this month and its 13 percent gain for the year is Asia’s best performance.
Elsewhere, the Philippine peso climbed 1.6 percent this quarter to 47.365, while the Singapore dollar advanced 2.8 percent to S$1.4076. Thailand’s baht rose 1.9 percent to 33.43. China’s yuan was at 6.8263 versus 6.8307 at the end of June.
(Source: Bloomberg)
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