Bloomberg News

Asia Currencies Rise to Three-Month High on Manufacturing Data

February 02, 2012

Feb. 2 (Bloomberg) -- Asian currencies strengthened to a three-month high, led by Malaysia’s ringgit and South Korea’s won, as U.S. manufacturing data added to optimism the world’s largest economy will prop up demand for the region’s exports.

The MSCI Asia-Pacific Index of shares gained for a third day after reports yesterday showed U.S. manufacturing expanded at the fastest pace since June and production gauges in China and India rose in January. Global funds bought $1.3 billion more Indian, South Korean and Taiwanese shares than they sold this week, taking net purchases this year to $9.8 billion, according to exchange data.

“With gains in stocks and good data out of the U.S., risk sentiment is improving,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “We will probably see some more fund inflows into the region for now, supporting Asian currencies.”

The ringgit surged 0.8 percent to 3.0175 per dollar as of 4:53 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The won climbed 0.7 percent to 1,118.35 and the Taiwan dollar advanced 0.5 percent to NT$29.55. The Bloomberg- JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, rose for a third day, reaching the highest level since Oct. 31.

The U.S. Institute for Supply Management’s index climbed to 54.1 in January from a revised 53.1 in December. China’s purchasing managers’ index increased to 50.5 last month from 50.3 in December while HSBC Holdings Plc and Markit Economics said India’s index rose to 57.5 from 54.2.

Korean Stocks Jump

The won reached the strongest level since November as the Kospi Index of equities jumped 1.3 percent. South Korea’s foreign-exchange reserves increased by $4.94 billion to $311.3 billion at the end of January from a month earlier as the euro and British pound strengthened against the dollar, the Bank of Korea said today.

“Improving global economic data is supporting the won,” said Jeon Seung Ji, a Seoul-based currency analyst at Samsung Futures Inc. “The won didn’t fall much yesterday even after South Korea’s trade balance turned out to be a deficit, and this signals the market is tilted toward some risk-taking.”

The ringgit advanced to the highest level in more than four months after data showed global funds added to holdings of the nation’s bonds last year. International investors raised their ownership of ringgit-denominated debt by 36 percent in 2011 to 164.5 billion ringgit ($54.5 billion), Bank Negara Malaysia said on its website on Jan. 31. The central bank left its benchmark interest rate unchanged at 3 percent at a review this week.

“Risk appetite is gradually improving,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “Given the stable interest-rate environment in Malaysia, more foreign funds are expected to return.”

Philippine Rates

The Philippine peso rose to a three-month high as speculation policy makers will cut borrowing costs to support economic growth spurred demand for the nation’s assets. The peso advanced 0.7 percent to 42.662 per dollar.

Overseas investors bought $372 million more Philippine stocks than they sold this year through yesterday, according to exchange data. The central bank, which lowered its benchmark rate last month for the first time since 2009, isn’t ruling out another reduction this quarter, Governor Amando Tetangco said yesterday after a report this week showed economic growth slowed in 2011.

“For the Philippines, the positive credit fundamentals are helping, meaning yields are still low, supporting local equities,” said Estelito Biacora, senior vice president and head of private banking in Manila at Bank of the Philippine Islands. Foreign investors “are still keeping their holdings in Philippine bonds,” he said.

Elsewhere, the Thai baht added 0.2 percent to 30.93 per dollar and Indonesia’s rupiah gained 0.5 percent to 8,943. China’s yuan strengthened 0.08 percent to 6.3018.

--With assistance from Jiyeun Lee in Seoul, Andrea Wong in Taipei, Elffie Chew in Kuala Lumpur and Lilian Karunungan in Singapore. Editors: Andrew Janes, Anil Varma

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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