Asian currencies strengthened for a third week after the European Central Bank unveiled a bond- buying plan to stem the region’s debt crisis, spurring a rally in global stocks.
ECB President Mario Draghi said on Sept. 6 that policy makers agreed to an unlimited debt-purchase program and reports this week showing improvements in U.S. jobs and the services industry tempered concern about a slowdown in the world’s biggest economy. The Philippine peso completed its best week in almost three months and Taiwan’s dollar reached a two-month high yesterday.
“The ECB taking action leads to optimism about stability in the euro-area financial markets,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “That improved risk sentiment and encouraged fund inflows to risker assets, supporting emerging currencies.”
The peso rallied 1 percent this week to 41.67 per dollar in Manila, according to Tullett Prebon Plc, the most since the five days ended June 15. The Taiwan dollar strengthened 0.4 percent to NT$29.842, South Korea’s won climbed 0.4 percent to 1,130.40 and Thailand’s baht advanced 0.4 percent to 31.22.
The Bloomberg-JP Morgan Asia Dollar Index, which tracks the region’s currencies, rose 0.3 percent this week. Its 60-day historical volatility increased to 3.44 percent from 3.42 percent on Aug. 31. The MSCI Asia Pacific Index of shares advanced 2.2 percent yesterday, while the S&P 500 Index of U.S. equities surged 2 percent on Sept. 6 to the highest level since May 2008.
U.S. jobless claims fell last week and companies added more workers than forecast in August, an ADP Employment survey showed Sept. 6. An index measuring U.S. non-manufacturing industries rose in August, beating economists’ estimates, the Institute for Supply Management reported the same day.
The won touched a three-week high after Fitch Ratings raised the nation’s creditworthiness to AA- on Sept. 6, one step above Japan and China, citing its “economic and financial stability in a volatile global environment.” Moody’s Investors Service lifted its rating on South Korea by one step to Aa3 on Aug. 27.
“The ECB’s announcement was more or less expected in the market, but combined with good U.S. economic data and Fitch’s rating upgrade, sentiment toward risk assets improved,” said Ryoo Hyun Jung, chief currency dealer at Citibank Korea Inc. in Seoul.
China’s yuan completed a sixth weekly gain on speculation the government will step up spending on roads and railways to make up for a dwindling contribution from exports. Overseas sales rose 1 percent in July from a year earlier, the least since January, official data show.
“China is likely to step up fiscal stimulus soon if exports fail to rebound strongly,” said Tommy Ong, a Hong Kong- based senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd.
The currency rose 0.09 percent this week to 6.3430 per dollar, according to the China Foreign Exchange Trading System. The central bank fixed its daily reference rate 0.04 percent stronger yesterday.
Elsewhere, Malaysia’s ringgit advanced 0.3 percent this week to 3.1070 per dollar, while India’s rupee climbed 0.2 percent to 55.3950. Indonesia’s rupiah lost 0.1 percent to 9,588, the fourth straight weekly drop. Vietnam’s dong was little changed at 20,848.
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