Bloomberg News

Peso, Rupee Lead Gains in Asian Currencies on Greek Progress

September 28, 2011

Sept. 28 (Bloomberg) -- The Philippine peso and India’s rupee advanced on optimism European leaders will find a solution to contain their debt crisis. In other Asian markets exchange rates and stocks swung between gains and losses.

Greek Prime Minister George Papandreou won parliament backing yesterday for a property tax that would pave the way for further aid, while German Chancellor Angela Merkel said Europe’s largest economy is ready to offer assistance. Concern still lingers that a failure to implement measures to cut the Greek budget deficit will lead to a default.

“Asian currencies may have a slight gain today because there’s a bit more optimism on the European situation,” said Leong Sook Mei, the regional head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in Singapore. “In the longer term, at least for the next six months, we have actually changed our trajectory for Asian currencies to depreciation because for us the euro-risk development still remains very high.”

The peso climbed 0.9 percent to 43.455 per dollar from Sept. 26 at the 4 p.m. close in Manila, according to Tullett Prebon Plc. The rupee rose 0.5 percent to 48.8550, South Korea’s won advanced 0.3 percent to 1,170.59, and Taiwan’s dollar appreciated 0.2 percent to NT$30.410. China’s yuan gained 0.08 percent to 6.3938. Philippine financial markets were shut yesterday due to a typhoon.

The MSCI Asia-Pacific Index of regional shares rose 0.3 percent after dropping 0.2 percent earlier. Greek lawmakers voted 155 to 142 yesterday to approve a property tax to help plug the budget shortfall, taking the country a step closer to securing an 8 billion-euro ($11 billion) aid package next month.

‘China’s Determination’

China’s yuan rose the most in more than a week after the central bank set a record daily reference rate, fueling speculation policy makers will favor currency gains as a means to tame inflation and support global exports.

Chinese consumer prices increased 6.2 percent in August from a year earlier following a 6.5 percent rise in July that was the biggest in three years, official data showed on Sept. 9. Inflation peaked in July Lu Zhongyuan, deputy director of the State Council Development Research Center, said at a briefing in Beijing today.

“Today’s fixing reflects China’s determination to tame inflation with a stronger currency,” said Edmond Law, deputy head of foreign exchange at BWC Capital Markets in Hong Kong. “The inflation slowdown in August was matched by the yuan’s gain for the same period. Yuan appreciation had proved useful in reining in rising prices.”

Rupiah Less Vulnerable

The rupiah, the yuan and the peso are likely to prove the most resilient of Asia’s emerging-market currencies as large domestic economies help China, Indonesia and the Philippines withstand a global slowdown, Western Asset Management Co. said.

“They are more domestic-demand driven,” the fund manager, part of Baltimore-based Legg Mason Inc., said in a press release today that didn’t identify the authors. “We expect the authorities in China to allow for further appreciation to help dampen the still elevated inflationary pressure.”

Gains in the won were limited after central bank data today showed manufacturers’ confidence held at a 21-month low. South Korea has sufficient foreign-exchange reserves to cope with a potential financial crisis even if European investors take their money out of the country, Bank of Korea Governor Kim Choong Soo said in a parliamentary audit yesterday.

“Recent developments in Europe’s debt talks eased fear in the market a little, but investors are aware that Europe’s debt crisis has a long way to go before it settles down,” said Byeon Ji Young, a currency analyst at Woori Futures Co.

Elsewhere, the rupiah rose 0.2 percent to 8,890 per dollar, according to prices from local banks compiled by Bloomberg. It gained the most since September 2009 yesterday. Malaysia’s ringgit and the Thai baht declined 0.4 percent to 3.1645 and 31.02, respectively.

--With assistance from Jiyeun Lee in Seoul, Fion Li in Hong Kong and David Yong in Singapore. Editors: Andrew Janes

To contact the reporter on this story: Lilian Karunungan in Singapore at

To contact the editor responsible for this story: Sandy Hendry at

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