Asian Currencies Rise This Week, Led by Peso, on Growth, Rates
July 30, 2010, 8:39 PM EDTBy Lilian Karunungan
July 31 (Bloomberg) -- Asian currencies strengthened this week, led by the Philippine peso and Indonesia’s rupiah, as the fastest economic growth in the world and relatively high interest rates attracted funds to the region.
The peso, rupiah and Taiwan’s dollar advanced on each of the last five days and the MSCI Asia-Pacific Index of shares had a fourth weekly gain. South Korea this week reported bigger increases in second-quarter gross domestic product and June industrial output than economists forecast, while the Reserve Bank of India raised interest rates for the fourth time this year to quell inflation.
“Asian currencies are well supported by their interest- rate stance and relatively more positive economic prospects,” said Enrico Tanuwidjaja, a regional economist at OSK-DMG Group in Singapore.
The peso strengthened 1.7 percent this week to 45.525 per dollar at the 4 p.m. close in Manila. Indonesia’s rupiah appreciated 1 percent to 8,955, earlier touching a three-year high of 8,933, and Taiwan’s dollar advanced 0.3 percent to NT$32.050. South Korea’s won climbed 1.4 percent to 1,182.75 and the Indian rupee rose 1 percent to 46.49.
Emerging-market equity funds in Asia excluding Japan received more than $1 billion in the week ended July 28, the strongest inflows in 14 weeks, according to Cambridge, Massachusetts-based EPFR Global, which tracks firms overseeing $13 trillion of assets. Foreigners pumped more than $7 billion into equities in India, South Korea and Taiwan this month, exchange data show.
Aquino Pledges
Developing economies in Asia will expand 9.2 percent in 2010, outpacing growth of 2.6 percent in advanced countries, the International Monetary Fund said on July 7. Singapore’s gross domestic product expanded 18.1 percent in the first half, the fastest pace since records began in 1975.
The peso had its biggest weekly gain this year after President Benigno Aquino, who took office at the end of June, pledged to spur economic growth and attract investment in his first State of the Nation address on July 26.
“With the new government, it seems there will be stability and it will attract foreign investors,” said Jose Emmanuel Hilado, treasurer at Rizal Commercial Banking Corp. in Manila. “The peso in terms of fundamentals should be stronger.”
The government is targeting economic growth of 7 percent to 8 percent annually from 2011 to create jobs and fight poverty, Finance Secretary Cesar Purisima said on July 27.
Growth Prospects
The won completed its biggest monthly increase since September 2009 after reports this week showed industrial output increased 16.9 percent from a year earlier in June and the current-account surplus reached a one-year high of $5.04 billion. Economists forecast a 16.5 percent gain in industrial production, a Bloomberg survey showed.
“I’m reasonably happy with the data as growth is holding up pretty well,” said Brian Jackson, a Hong Kong-based senior emerging-markets strategist at Royal Bank of Canada. “Trade data has been solid, suggesting a fair bit of support from external demand, which is reflected in the industrial output.”
South Korea’s economy grew 1.5 percent in the second quarter from the previous three months, faster than the 1.3 percent growth forecast in a Bloomberg survey, data on July 26 showed.
Ratings Outlook
The rupiah yesterday rose for a seventh day, its longest winning streak in more than three years. The government on July 26 predicted economic growth will accelerate to 6 percent in the second half of 2010, from 5.8 percent in the last six months.
The Indonesian currency has scope to appreciate further, after gains of 5 percent so far this year and 16 percent in 2009, as an improving economy and rising commodity exports help the nation win investment-grade debt ratings, according to Philippe Jauer, chief investment officer of Amundi Singapore.
“We are very positive on Indonesia’s local and external debt, which is one of the bigger bets within our investments in Asian sovereign debt,”, said Jauer, who has a third of the $4 billion of fixed-income assets he oversees invested in Asia. “We should see Indonesia as an investment-grade country in the next 12 to 18 months.”
Elsewhere, Thailand’s baht slipped 0.1 percent to 32.25 per dollar this week. Malaysia’s ringgit rose 0.5 percent to 3.1823 and China’s yuan gained 0.1 percent to 6.7735.
--With assistance from Karl Lester M. Yap in Manila and Patricia Lui in Singapore. Editors: James Regan, Ven Ram
%VND %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY
To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.
To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.
