Bloomberg News

Asian Currencies Set for Third Weekly Advance on Japan, China

January 10, 2013

Asian currencies headed for a third weekly advance as Japan’s 10.3 trillion yen ($116 billion) spending package and a rebound in China’s exports improved the outlook for a global economic recovery.

The Bloomberg-JPMorgan Asia Dollar Index rose to a 16-month high as overseas sales from China, Taiwan and Malaysia grew more than analysts had forecast, according to official figures released this week. Japanese Prime Minister Shinzo Abe’s fiscal package will increase gross domestic product by about 2 percentage points and create about 600,000 jobs, according to a statement released by the Cabinet Office today.

“The global outlook is continuing to improve and we remain constructive on emerging markets for the year as external risks diminish,” said Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong. “The mood was boosted by the Japanese fiscal stimulus plan. We expect most regional currencies to do well.”

India’s rupee strengthened 1.4 percent this week through yesterday to 54.5775 per dollar, according data compiled by Bloomberg. Malaysia’s ringgit climbed 1.1 percent in the past five days to 3.0195 as of 10:15 a.m. in Kuala Lumpur, Thailand’s baht gained 0.9 percent to 30.25 and South Korea’s won rose 0.7 percent to 1,056.73.

The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, rose 0.25 percent this week. The gauge touched 118.63 today and yesterday, the strongest level since September 2011.

Record Inflows

Emerging-market equity funds attracted their biggest-ever weekly inflows of $7.4 billion in the seven days ended Jan. 9, Jonathan Garner and Pankaj Mataney, Morgan Stanley analysts, wrote in a report today. Developing-nation debt lured its second-largest inflows of $2 billion, according to the report, citing data from EPFR Global.

China, the top destination for exports from South Korea, Taiwan, Malaysia and Thailand, reported a 6 percent increase in imports for December yesterday, the fastest growth in six months. Exports climbed 14 percent, the most since May.

The rupee climbed to a one-week high of 54.565 yesterday on speculation the central bank will reduce borrowing costs to support growth.

Wholesale prices rose 7.37 percent in December from a year earlier, near the 10-month low of 7.24 percent in November, according to the median estimate in a Bloomberg survey before data due Jan. 14. The Reserve Bank of India will review interest rates on Jan. 29.

Malaysia Output

The ringgit gained for a fifth day, its longest winning streak since September, after government reports showed factory production and exports improved. Industrial output in Southeast Asia’s third-largest economy rose 7.5 percent in November from a year earlier, while overseas shipments grew 3.3 percent, both beating economists’ estimates.

“China trade numbers are fueling optimism global growth is picking up,” said Roy Teo, a currency strategist in Singapore at ABN Amro Bank NV. “There is new optimism and new money coming into financial markets. Risk-on may persist till the end of the month.”

Elsewhere in Asia, the Philippine peso appreciated 0.7 percent this week to 40.628 per dollar, Taiwan’s dollar advanced 0.6 percent to NT$28.949, while the Chinese yuan gained 0.23 percent to 6.2159. Indonesia’s rupiah was little changed from last week at 9,661.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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