Feb. 25 (Bloomberg) -- Most Asian currencies strengthened this week, with the Thai baht climbing to a five-month high, as upbeat U.S. economic data and monetary easing in China spurred demand for riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.1 percent and the MSCI Asia Pacific Index of shares climbed to a six-month high. Demand for higher-yielding assets was also buoyed by European leaders’ approval of a second bailout for Greece on Feb. 21. Chinese banks’ reserve requirements were relaxed yesterday for the second time in three months.
“Good data out of the U.S. leads to speculation external demand will improve, and that’s good for export-oriented economies like Malaysia and Thailand,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Fund inflows are supporting the currencies. Risk sentiment is also good after agreement was reached on Greece bailout.”
The baht advanced 1.3 percent this week to 30.38 per dollar in Bangkok, according to data compiled by Bloomberg. Malaysia’s ringgit climbed 0.8 percent to 3.0138 and India’s rupee gained 0.7 percent to 48.9450. China’s yuan strengthened 0.02 percent to 6.2978.
Stock markets in South Korea, India and the Philippines attracted $1.4 billion from overseas this week, according to latest exchange data. In Thailand, global funds boosted their holdings of shares by $264 million and pumped $457 million more into government bonds, official figures show.
“Inflows into debt are boosting the rupee,” said Naveen Raghuvanshi, a currency trader at Development Credit Bank Ltd. in Mumbai. “Sentiment is positive, and equity flows are supportive too.”
India auctioned $5 billion of corporate-bond quotas on Nov. 30 to foreign investors, who must utilize the allocations by Feb. 28 or let them expire. Overseas funds bolstered holdings of the nation’s local-currency government and company debt by $3.4 billion this year, exchange data show.
Reports on Feb. 23 showed U.S. initial jobless claims held at a four-year low in the week to Feb. 18, while home prices climbed more than economists forecast in December. Greece obtained a 130 billion euro ($174 billion) bailout this week needed to avoid a March bankruptcy. Consumer confidence in South Korea climbed to a three-month high in February, central bank figures showed yesterday.
Indonesia’s rupiah declined for a third week, weakening 0.8 percent to 9,118 per dollar, amid concern government plans to raise fuel prices will stoke inflation. Foreign investors trimmed their holding of local-currency government bonds 1.7 percent this month through Feb. 20 to 232 trillion rupiah ($25.6 billion), according to finance ministry statistics. The Jakarta Composite Index of stocks slumped 2.1 percent from a week ago.
“Foreign investors’ movement in stocks reflect that global appetite is elsewhere,” said Nurul Eti Nurbaeti, head of treasury research at PT Bank Negara Indonesia in Jakarta. “Fuel-price hikes may strain domestic fundamentals. The rupiah is likely to weaken.”
Elsewhere, the Singapore dollar rose 0.2 percent to S$1.2552 versus the greenback, while Taiwan’s dollar and South Korea’s won were little changed at NT$29.582 and 1,125.80. The Philippine peso slid 0.5 percent to 42.825.
--With assistance from Jiyeun Lee in Seoul, Jeanette Rodrigues in Mumbai and Yudith Ho in Singapore. Editors: James Regan, Anil Varma
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