Bloomberg News

Asia Currencies Gain in Week on Fed Comments, Rocket Failure

April 13, 2012

Asian currencies gained this week as the Federal Reserve signaled it will maintain a loose monetary policy and a North Korean rocket launch failed.

Singapore’s dollar led gains among Asia’s 10 most-used currencies excluding the yen as better-than-expected economic growth prompted the central bank to say it will target faster appreciation to limit inflation. China’s yuan advanced as data showed lending picked up in March and the trade balance unexpectedly swung to a surplus. Malaysia and the Philippines both reported jumps in February exports.

“Growth in the region is still resilient and Singapore’s move shows policy makers are more comfortable on the outlook than they were six months ago,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd.

The Singapore dollar strengthened 1.1 percent this week to S$1.2457 against its U.S. counterpart, the biggest advance since January, according to data compiled by Bloomberg. The yuan climbed 0.05 percent to 6.3030, Malaysia’s ringgit gained 0.4 percent to 3.0528 and the Philippine peso advanced 0.3 percent to 42.655.

Fed Chairman Ben S. Bernanke and Vice Chairman Janet Yellen said this week further easing may be warranted if U.S. economic growth falters. The monetary authority uses asset purchases to hold down borrowing costs, a policy that increased the supply of dollars and spurred demand for higher-yielding assets elsewhere.

Rocket Failure

South Korea’s won fell 0.3 percent this week to 1,135 per dollar after an intelligence report suggested North Korea plans to test a nuclear weapon. The currency strengthened 0.5 percent yesterday after a long-range rocket launched by North Korea broke up and fell into the sea within minutes of liftoff.

“Investors are just shrugging off this launch,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion. “The news came out before the market opened that the rocket launch failed, so investors didn’t have to worry about it.”

Singapore’s gross domestic product grew at an annual pace of 9.9 percent in the three months through March after contracting 2.5 percent in the last quarter of 2011, data showed yesterday. Economists expected a 6.8 percent rate, based on the median estimate in a Bloomberg survey. The central bank said it will increase the slope of the local dollar’s trading band, a decision predicted by only two of 21 economists in a survey.

Exports Optimism

The GDP report helped support the ringgit, said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur.

“Singapore exports to Europe and the U.S., so good GDP growth implies good demand and Malaysian exports,” he said.

Malaysia’s overseas sales increased 14.5 percent from a year earlier in February, while shipments from the Philippines rose 14.6 percent, data showed this week. January growth rates were 0.4 percent and 3 percent, respectively.

China’s new loans surged to 1.01 trillion yuan ($160 billion) last month from 710.7 billion in February, a central bank report showed April 12. Economic growth slowed to 8.1 percent in the first quarter, the least since mid-2009, the government reported yesterday.

Elsewhere, Thailand’s baht appreciated 0.6 percent this week to 30.82 per dollar, before financial markets closed for a holiday yesterday. Indonesia’s rupiah gained 0.3 percent to 9,140, Taiwan’s dollar rose 0.1 percent to NT$29.528 and India’s rupee fell 0.4 percent to 51.3025 per dollar.

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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