Bloomberg News

Asian Currencies Climb as China Pledges to Help Europe Crisis

February 15, 2012

Feb. 15 (Bloomberg) -- The Philippine peso and South Korea’s won led gains among Asian currencies after China pledged to invest in Europe’s bailout fund to help ease the region’s debt crisis.

The country with the world’s biggest currency reserves is ready to participate in programs including the European Financial Stability Facility, People’s Bank of China Governor Zhou Xiaochuan said in a speech today, echoing comments made yesterday by Premier Wen Jiabao. The Bloomberg-JPMorgan Asia Dollar Index gained 0.15 percent after touching a two-week low as European leaders canceled a meeting slated for today to discuss a bailout plan for Greece.

The peso appreciated 0.2 percent to 42.643 per dollar as of the close in Manila, after losing as much as 0.4 percent earlier, according to data compiled by Bloomberg. The won closed 0.2 percent stronger at 1,121.40 and Taiwan’s dollar strengthened 0.2 percent to NT$29.535.

“The market always welcomes reassurances about China’s participation in the Europe situation,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “The immediate concern is still the Greek issue. China’s firepower will be useful at a later stage.”

China had currency reserves of $3.18 trillion at the end of 2011, according to official data. Europe is the Asian nation’s biggest export market, making up about 18 percent of its overseas sales.

European finance ministers will hold a teleconference after canceling a Brussels meeting to prod Greece to do more to clinch 130 billion euros ($171 billion) of aid along with about 100 billion euros of debt relief from private bondholders. Greece needs the funds to make a 14.5 billion euro payment to bondholders in March.

Fund Inflows

Nine of the 10 most-traded currencies in Asia excluding the yen gained this year as global funds bought $14.7 billion more South Korean, Taiwanese and Indian equities than they sold, according to exchange data.

Developing Asia may expand 7.3 percent this year, compared with 1.8 percent growth in the U.S. and a contraction of 0.5 percent in the euro area, according to estimates released last month by the International Monetary Fund.

The won gained as international investors were net buyers of the nation’s equities for an eighth straight day and the Kospi index of shares rose by the most in a week.

“The won will move within a range until Greek issues are settled,” said Hong Seok Chan, a Seoul-based currency analyst at Daeshin Securities Co. “Exporters selling the dollar to benefit from a weaker won may” provide some support to the local currency, he said.

Malaysia’s Growth

The ringgit fell 0.4 percent earlier to this month’s weakest level. A central bank report at 6 p.m. local time may show the economy cooled last quarter. Gross domestic product rose 4.8 percent in the fourth quarter of 2011 after increasing 5.8 percent in the third, according to the median forecast in a Bloomberg News survey.

“The ringgit is trading on a weaker bias on expectations that the Malaysian economy will slow,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur. “The currency should trade within a tight range ahead of Greece’s debt ratification.”

Elsewhere, Indonesia’s rupiah weakened 0.2 percent to 9,044 per dollar. India’s rupee climbed 0.1 percent to 49.3350 and the Thai baht was little changed at 30.83 as was China’s yuan at 6.3000. Malaysia’s ringgit traded at 3.0415 compared with 3.0428 yesterday.

--With assistance from Elffie Chew in Kuala Lumpur and Jiyeun Lee in Seoul. Editors: Anil Varma, 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; 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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