Bloomberg News

Asian Currencies Gain on Speculation Fed Will Boost Stimulus

October 05, 2011

Oct. 5 (Bloomberg) -- Asian currencies strengthened, led by Malaysia’s ringgit and South Korea’s won, on speculation policy makers in Europe and the U.S. will boost monetary stimulus to revive the global economy.

The ringgit advanced for a second day as economists predicted that official data this week will show Malaysia’s export growth quickened in August. The Standard & Poor’s 500 Index rallied yesterday as Chairman Ben S. Bernanke said the Federal Reserve can take further steps to sustain a recovery that’s “close to faltering.”

“We had a very positive finish to Wall Street overnight and that has seen the market open on a positive footing but it appears to be pretty fleeting,” said Jonathan Cavenagh, a Singapore-based strategist at Westpac Banking Corp. “Any relief rally will be used as an opportunity to buy the dollar.”

The ringgit advanced 0.3 percent to 3.1910 per dollar as of 4:46 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. Singapore’s dollar strengthened 0.6 percent to S$1.3071 and the won gained 0.3 percent to 1,190.23.

The MSCI Asia-Pacific Index of shares rose as much as 0.6 percent after the Financial Times cited European Union Economic and Monetary Affairs Commissioner Olli Rehn as saying the recapitalization of Europe’s banks must continue to help address the region’s debt crisis.

Malaysian Exports

“Prospects of a recapitalization in Europe and Bernanke’s statement helped to boost risk appetite,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit climbed from a 15-month low as the median estimate of economists in a Bloomberg survey showed Malaysia’s exports rose 8 percent in August from a year earlier after having grown 7.1 percent the prior month. The statistics department will release the data tomorrow.

The won pared gains after advancing as much as 0.5 percent as South Korea’s foreign-exchange reserves dropped the most since November 2008. The reserves were $303.4 billion at the end of September, compared with $312.2 billion a month earlier, the Bank of Korea said today. The drop came as Finance Minister Bahk Jae Wan said the government will act to stabilize the financial markets when needed.

Thai Intervention

Central banks are selling U.S. Treasuries at a record pace to support their weakening currencies as Europe’s debt crisis drains capital from emerging-market economies, according to Westpac Banking Corp. Central bank net sales of U.S. Treasuries held in custody at the Federal Reserve reached a record $25.3 billion last week, according to data compiled by Bloomberg.

Thailand’s baht was steady after the central bank said it intervened in the market “recently.” Policy makers “sold the dollar, but not much,” Governor Prasarn Trairatvorakul said yesterday.

The baht slid 3.7 percent last month, the most in a decade, on concern a faltering global recovery will damp demand for the nation’s exports. Overseas shipments account for about two- thirds of Southeast Asia’s second-biggest economy. The baht traded at 31.15 per dollar, compared with 31.16 yesterday.

“Intervention won’t be able to reverse the trend, but the baht’s decline may stall just for now,” said Minori Uchida, a senior analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd.

The Philippine peso advanced 0.5 percent to 43.868 per dollar and Taiwan’s dollar gained 0.2 percent to NT$30.632. Indonesia’s rupiah lost 0.3 percent to 8,933. Financial markets in China are shut this week for the National Day holiday.

--With assistance from Jiyeun Lee in Seoul, Elffie Chew in Kuala Lumpur and Yumi Teso in Bangkok. Editors: Ven Ram, James Regan

%VND %KRW %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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