Asian currencies advanced after housing data in the U.S. beat analysts’ forecasts, brightening the outlook for the region’s exports as European leaders meet this week to discuss ways to tackle the debt crisis.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, rose from a three-week low after purchases of new homes in the U.S. increased last month to the highest level since April 2010. The Philippine peso gained the most in almost a week as a slide in imports eroded demand for the U.S. currency.
“There was better-than-expected data in the U.S.,” said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “The focus is still on the euro zone,” he said.
The peso appreciated 0.4 percent to 42.47 per dollar as of 4:53 p.m. in Manila, according to Tullett Prebon Plc, taking its gain this quarter to 1.1 percent. Malaysia’s ringgit rose 0.2 percent to 3.1957, South Korea’s won climbed 0.3 percent to 1,158.43 and Thailand’s baht strengthened 0.2 percent to 31.82.
Asian currencies declined this quarter with the exception of the peso and yen as Europe’s financial crisis reduced demand for emerging-market assets. Moody’s Investors Service downgraded more Spanish banks yesterday as German Chancellor Angela Merkel continued to oppose joint euro bonds to resolve the crisis as officials prepare to meet in Brussels on June 28.
Rupee Leads Losses
India’s rupee led losses in the quarter with a 11 percent drop, touching a record low of 57.3275 per dollar on June 22. In an effort to stem the decline, India’s government raised the ceiling on overseas ownership of sovereign debt by $5 billion to $20 billion yesterday. The currency weakened 0.2 percent today to 57.1450.
The Asia Dollar Index has declined 2.3 percent since March 30. Its 60-day historical volatility dropped two basis points to 2.90 percent today and was 52 basis points lower than at the end of the first quarter.
The Philippine currency gained today after an official report showed imports fell 13.7 percent in April from a year earlier, compared with a 3.3 percent contraction in March. The trade deficit narrowed to $135 million from $1.05 billion.
“Manufacturers are still wary of stepping up purchases,” said Radhika Rao, an economist at Forecast Pte in Singapore. “Ahead of the European summit, gains in Asian currencies are going to be tentative.”
The baht rebounded from a three-week low after the government said yesterday exports rose 7.68 percent in May from a year earlier, beating the median forecast of 0.5 percent in a Bloomberg News survey. Shipments fell 3.67 percent in April.
Elsewhere, Taiwan’s dollar was little changed at NT$29.990 against its U.S. counterpart, while the Vietnamese dong rose 0.1 percent to 20,895. China’s yuan was steady at 6.3629 and Indonesia’s rupiah declined 0.7 percent to 9,507.
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