Bloomberg News

Asian Currencies Pare Weekly Declines After Greece Secures Debt-Swap Deal

March 09, 2012

Most Asian currencies pared this week’s losses after the announcement that investors with 95.7 percent of Greece’s privately held bonds will participate in a debt swap and a report indicated China’s inflation slowed.

The MSCI Asia-Pacific Index of stocks climbed 0.7 percent yesterday, capping its biggest two-day advance since January. Consumer prices in China rose in February at the slowest pace since June 2010, providing scope for the central bank to ease monetary policy and support economic growth. Malaysia’s ringgit fell following a two-day rally as the country’s central bank left interest rates unchanged for a fifth straight meeting.

Optimism about the Greek debt swap “was priced into the market before the announcement and the announcement is a nice relief,” said Choong Yin Pheng, manager for economic and bond research at Hong Leong Bank Bhd. (HLBK) in Kuala Lumpur. “China is growing relatively strongly and people are hopeful for more supporting policies.”

India’s rupee appreciated 1 percent to 49.795 per dollar in Mumbai, trimming its weekly decline to 0.6 percent, according to data compiled by Bloomberg. Indonesia’s rupiah rose 0.2 percent to 9,123 per dollar, paring its weekly loss to 0.5 percent. Taiwan’s dollar climbed 0.1 percent to NT$29.504 and was down 0.2 percent from March 2.

The Bloomberg-JPMorgan Asia Dollar Index (ADXY) climbed as much as 0.1 percent yesterday and closed at 117.42, little changed from the day before. It ended the week lower for the first time since Feb. 10. The index’s 60-day historical volatility dropped to 3.35 percent, the lowest measure of price swings since August, signaling reduced market uncertainty.

Greek Debt Swap

Bondholders tendered 152 billion euros ($199 billion) of Greek-law bonds, or 85.8 percent, after the government offered to swap their holdings for new securities. Another 20 billion euros of foreign-law bonds were also tendered, the finance ministry said in an e-mailed statement yesterday.

The Greek government will activate so-called collective action clauses to achieve full participation from holders of Greek-law bonds. Greece’s use of the clauses triggers payouts on credit-default swaps, the International Swaps and Derivatives Association’s determinations committee said in a statement yesterday.

China’s yuan gained the most in a month after data showed consumer prices in February rose 3.2 percent from a year earlier, less than the 3.4 percent estimate of economists in a Bloomberg News survey. The currency climbed 0.09 percent to 6.3107 per dollar, paring this week’s loss to 0.2 percent, according to the China Foreign Exchange Trade System.

“Easing inflation is good news for China’s economy as it means more room for policy easing,” said Daniel Chan, chief economist at BWC Capital Markets in Hong Kong. “Expectations that Greece could restructure its debt lifted the yuan.”

Policy Rates

Malaysia’s ringgit slipped 0.2 percent to 3.0093 per dollar. Bank Negara Malaysia Governor Zeti Akhtar Aziz kept the benchmark overnight policy rate at 3 percent, the central bank said in a statement in Kuala Lumpur yesterday. The decision was predicted by 19 of 20 economists surveyed by Bloomberg News, with one calling for a quarter-percentage-point cut.

The Bank of Korea left its seven-day repurchase rate on hold for a ninth straight month at 3.25 percent this week, while Bank Indonesia kept its reference rate at 5.75 percent.

South Korea’s won closed the week 0.2 percent lower at 1,117.90, while the Philippine peso strengthened 0.3 percent 42.585. Vietnam’s dong was little changed yesterday and climbed 1 percent to 20,830 over the week. Thailand’s baht dropped 0.2 percent yesterday to 30.59, ending the week down by the same margin.

To contact the reporters 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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