Bloomberg News

Asian Currencies Climb as U.S. Jobs Data Improves Export Outlook

October 10, 2011

Oct. 10 (Bloomberg) -- Asian currencies gained, led by Malaysia’s ringgit, as an improvement in the U.S. labor market brightened the region’s export outlook and gains in stock markets revived demand for higher-yielding assets.

Exchange data showed overseas investors purchased $601 million more South Korean, Taiwanese and Thai equities than they sold on Oct. 7. The MSCI Asia-Pacific Excluding Japan Index of shares rose for a fourth day after the Labor Department said last week American payrolls increased by 103,000 in September, beating the median forecast in a Bloomberg survey of economists for 60,000. China’s yuan gained the most since its revaluation in July 2005 after the U.S. said the currency is undervalued.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent to 115.73 as of 4:24 p.m. in Hong Kong. The ringgit climbed 1.1 percent to 3.1257 per dollar, the South Korean won rose 0.6 percent to 1,171.30 and the Philippine peso added 0.4 percent to 43.39. The yuan climbed 0.6 percent to 6.3486 after a week-long holiday.

“Asian currencies including the won will show a limited gain as the market prices in upbeat U.S. data,” said Roh Sang Chil, Seoul-based head of currency trading at Kookmin Bank. “Still, Europe won’t see its troubles fading away easily, which will weigh heavily on traders’ minds.”

In Europe, Spain and Italy were downgraded by Fitch Ratings on concern they will struggle to improve their finances. French President Nicolas Sarkozy, speaking yesterday at a briefing in Berlin with German Chancellor Angela Merkel, set a deadline to deliver a response to the Greek crisis and defects in the 17- nation euro area. He said European leaders would deliver a plan by the Group of 20 summit on Nov. 3.

U.S. Pressure

President Barack Obama said on Oct. 6 in Washington that China has been aggressive in “gaming the trading system,” including intervening to keep its currency artificially low. The People’s Bank of China said on Oct. 4 that the U.S. risks triggering a trade war through legislation that would punish the Asian nation for manipulating exchange rates.

“China faces pressure to appreciate the currency as the U.S. pushes for a stronger yuan,” said Kenix Lai, a senior market analyst at Bank of East Asia Ltd. in Hong Kong. “There’s room for China to allow more yuan gains given its relatively resilient economy.”

The Purchasing Managers’ Index published Oct. 1 by the China Federation of Logistics and Purchasing rose for a second month, to 51.2, with export orders gaining. Readings above 50 signal expansion.

The ringgit rose for a fifth day, the longest winning streak in eight weeks, on speculation investors will pump more funds into the nation as the economy sustains its recovery.

Malaysia Exports

The currency climbed to its strongest level in more than two weeks after an Oct. 7 report showed exports rose in August at the fastest pace in four months and Prime Minister Najib Razak said economic growth may quicken in 2012. The ringgit tumbled 7 percent in September, its worst performance since 1998, as Europe’s debt crisis spurred demand for dollars.

Investment inflows “will be good as economic growth is projected to be better,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ in Kuala Lumpur. “The Malaysian currency will continue to trade in a range with developments in Europe dictating the trend.”

The peso rose to the strongest in three weeks. A rebound in demand from Japan after March’s earthquake may help shore up Philippine exports in August, due for release tomorrow, according to Malayan Banking Bhd.

“Sentiment is much better with the job data, which presents good buying opportunities in Asian currencies given the recent selloff,” said Enrico Tanuwidjaja, a foreign-exchange strategist in Singapore at Malayan Banking. “We are looking for Japan’s recovery to beef up Philippine exports.”

Elsewhere, India’s rupee gained 0.2 percent to 49.0787 and Thailand’s baht added 0.1 percent to 30.90. Indonesia’s rupiah dropped 0.6 percent to 8,958. Markets in Taiwan are closed for a public holiday.

--With assistance from David Yong in Singapore and Fion Li in Hong Kong. Editors: Sandy Hendry, Simon Harvey

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

To contact the reporters on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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