Bloomberg News

Asian Currencies Advance Most in Two Weeks on Europe Debt Accord

October 27, 2011

Oct. 27 (Bloomberg) -- Asian currencies rallied the most in more than two weeks as European Union leaders made progress on plans to stem the sovereign debt crisis and after France sought China’s help to bolster the region’s bailout fund.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks Asia’s 10 most-traded currencies excluding the yen, rose 0.5 percent to 116.90, set for the highest close in almost six weeks. French President Nicolas Sarkozy said today that EU leaders and banks have agreed to a 50 percent writedown on Greek debt. China said that the accord will bring “new vitality into European integration."

‘‘The news injected a bit more confidence into the market,’’ said Faizal Yussof, a currency trader at KAF Investment Bank Bhd. in Kuala Lumpur. ‘‘We still need to watch bank deleveraging and recapitalization. We are not out of the woods yet.’’

South Korea’s won strengthened 1.5 percent to 1,115.22 per dollar at the close in Seoul, according to data compiled by Bloomberg. The Philippine peso gained 0.8 percent to a six-week high of 42.857 and Malaysia’s ringgit advanced 0.6 percent from Oct. 25 to 3.1080.

The MSCI Asia-Pacific Index of stocks rose 3 percent. Global investors added a total $1.3 billion to holdings of stocks in Taiwan, South Korea and Thailand this week, according to stock exchange data.

Investors have agreed to a voluntary writedown of on Greek debt, equivalent to 100 billion euros ($140 billion), Sarkozy told reporters in Brussels. The euro region’s bailout fund will be expanded by four to five times to $1.4 trillion, he said.

Korea GDP

The International Monetary Fund will be a partner in Europe’s bailout fund, Sarkozy said. He said he plans to call his Chinese counterpart Hu Jintao to ask Asia’s largest economy to contribute as well. Banks need 106 billion euros in fresh capital to weather the crisis, the European Banking Authority estimated.

The agreement is ‘‘conducive to lifting market confidence, promoting the sustainable economic development of the EU and Eurozone,” foreign ministry spokeswoman Jiang Yu told reporters in Beijing.

The won posted its biggest jump this month after the Bank of Korea said today the economy grew at an annual rate of 3.4 percent last quarter, the same as in the preceding three months. Consumer confidence rose to 100 this month from 99 in September, the first increase since May, the central bank said.

“Market players tend to react more to positive news than negative news recently,” said Ha Jun Woo, a Seoul-based currency dealer with Daegu Bank. “South Korea’s GDP data was within expectations, and will have limited impact on the currency market.”

China’s yuan slipped 0.1 percent to 6.3595 per dollar in Shanghai. A government report showed industrial companies’ profits rose 27 percent in the first nine months of 2011 from a year earlier, compared with a 28.2 percent pace in the January through August period.

Elsewhere, Indonesia’s rupiah rose 0.1 percent to 8,865 per dollar, according to prices from local banks compiled by Bloomberg. Taiwan’s dollar rose 0.2 percent to NT$30.063, while Thailand’s baht climbed 0.5 percent to 30.66. Financial markets are closed in India for a holiday.

--With assistance from Yumi Teso in Bangkok and Lilian Karunungan in Singapore. Editors: Andrew Janes, Anil Varma

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

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

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


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