Bloomberg News

Asia Currencies Gain After Global Funds Boost Share Holdings

October 17, 2011

Oct. 17 (Bloomberg) -- Asian currencies strengthened, led by South Korea’s won, after international funds added to holdings of regional assets to benefit from growth in the world’s fastest-growing economies.

Global funds bought $1.5 billion more Indonesian, South Korean and Taiwanese shares than they sold last week, exchange data show. China’s gross domestic product increased more than 9 percent for a ninth quarter, official data will show this week, according to economists in a Bloomberg survey. The MSCI Asia- Pacific Index of shares rose after European Union Economic and Monetary Affairs Commissioner Olli Rehn said clarity on a plan to contain the debt crisis will emerge in the “coming days.”

“Sentiment and risk appetite are improving and that provides support for Asian currencies through stock buying,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “Europe’s situation will remain a dominant factor in the market.”

The won strengthened 1.4 percent to 1,140.45 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit added 1 percent to 3.1005, the Philippine peso climbed 0.6 percent to 43.115, Taiwan’s dollar rose 0.7 percent to NT$30.10 and India’s rupee gained 0.6 percent to 48.7275.

The MSCI Asia-Pacific Index of shares advanced almost 2 percent after rallying 3.4 percent last week, the most since March. Outflows from all global-tracked equity funds fell to a four-week low of $1.37 billion during the second week of October, EPFR Global said.

Economic Growth

Singapore’s economy expanded an annualized 5.9 percent in the third quarter after having grown 1 percent in the three months ended June, a government report showed on Oct. 14. Official data tomorrow will show China’s gross domestic product rose 9.3 percent from a year earlier, according to the median estimate of 22 economists in a Bloomberg News survey. The world’s second-biggest economy grew 9.5 percent in the three months through June.

The won rose to the strongest level in almost four weeks after U.S. government data showed on Oct. 14 that retail sales rose 1.1 percent in September from a month earlier, the most since February. The U.S. is South Korea’s second-biggest export market.

The ringgit touched the strongest level in four weeks as Malaysia’s benchmark stock index climbed 1.2 percent.

“There’s a bit of risk-on,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “There’s pretty firm commitment from the European Union leaders about the policy that they might come out with toward the end of the month.”

Stronger Fixing

The yuan gained for a second day as the People’s Bank of China set its reference rate stronger for the first time in four days. Official data tomorrow will show industrial output climbed 13.4 percent in September from a year earlier after having risen 13.5 percent in August, a separate poll showed. The yuan strengthened 0.12 percent to 6.3710 per dollar, after gaining 0.12 percent last week.

“The firmer fixing confirms that China continues to want its currency to appreciate,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB.

Elsewhere, Thailand’s baht gained 0.6 percent to 30.61 per dollar and the Indonesian rupiah rose 0.4 percent to 8,817, according to data compiled by Bloomberg.

--With assistance from Jiyeun Lee in Seoul, Lilian Karunungan in Singapore and Judy Chen in Shanghai. Editors: Ven Ram, Andrew Janes

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

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

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


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