Asian currencies rose this week, led by South Korea’s won, on optimism funds will increase purchases of the region’s assets after economic data showed accelerating growth and the U.S. signaled rates will remain low.
The Bloomberg-JPMorgan Asia Dollar Index halted two weeks of declines as European Union leaders sought to resolve Greece’s debt crisis, shoring up appetite for higher-yielding assets. Taiwan’s economy grew more than initially estimated in the first quarter and Singapore raised its growth forecast for 2011.
“Overall, Asian currencies will continue to rise,” said Vishnu Varathan, an economist in Singapore at Capital Economics (Asia) Pte. “Growth is still far superior to what we’ve seen in developed economies.”
South Korea’s won appreciated 0.4 percent this week to 1,082.80 per dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar climbed 0.3 percent to S$1.2358 and Indonesia’s rupiah rose 0.1 percent to 8,543.
The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, advanced 0.3 percent in the last five days. Minutes released on May 18 of the Federal Reserve’s last meeting showed the central bank preferred to reverse record monetary stimulus by ending reinvestment of asset proceeds before raising interest rates.
Taiwan’s economy grew 6.55 percent in the first quarter from a year earlier, compared with a revised 7.13 percent in the fourth quarter, the statistics bureau said in Taipei on May 19. The preliminary estimate last month was 6.19 percent. Singapore’s gross domestic product will increase 5 percent to 7 percent this year, from an earlier forecast for 4 percent to 6 percent growth, the trade ministry said in a statement May 19.
Asian Economies
Emerging-market economies in Asia will expand 8.4 percent this year, compared with 2.4 percent growth in the world’s developed economies, according to forecasts made by the International Monetary Fund in April.
Malaysia’s ringgit pared a weekly loss on speculation policy makers will boost interest rates after inflation accelerated at the fastest pace since March 2009. The currency strengthened 0.2 percent yesterday to 3.0185 and fell 0.3 percent for the week. Consumer prices rose 3.2 percent from a year earlier in April, after increasing 3 percent the previous month. Bank Negara Malaysia said the local economy remains on a steady growth path.
“Inflation is still a worry, and the market is pricing in one more rate increase before the year ends,” said Zulkiflee Nidzam, head of foreign exchange and bond trading at Asian Finance Bank Bhd. in Kuala Lumpur.
Interest Rates
Bank Negara Malaysia lifted its overnight policy rate to 3 percent from 2.75 percent on May 5, the first increase since July, saying the local economy faces higher inflationary pressures in the second half.
The won’s appreciation was limited after the government said May 19 it will tighten limits on the amount of currency derivatives banks can hold. The finance ministry said local branches of overseas banks will be allowed to hold currency derivatives contracts equivalent to no more than 200 percent of equity capital, down from 250 percent, and the cap for domestic banks will be reduced to 40 percent from 50 percent.
Elsewhere, Thailand’s baht declined 0.3 percent this week to 30.30 per dollar, according to data compiled by Bloomberg. The Philippine peso and the Taiwan dollar were little changed at 43.225 and NT$28.780, respectively. China’s yuan advanced 0.08 percent to 6.4926, while India’s rupee weakened 0.1 percent to 45.015.
Source: www.bloomberg.com
The Bloomberg-JPMorgan Asia Dollar Index halted two weeks of declines as European Union leaders sought to resolve Greece’s debt crisis, shoring up appetite for higher-yielding assets. Taiwan’s economy grew more than initially estimated in the first quarter and Singapore raised its growth forecast for 2011.
“Overall, Asian currencies will continue to rise,” said Vishnu Varathan, an economist in Singapore at Capital Economics (Asia) Pte. “Growth is still far superior to what we’ve seen in developed economies.”
South Korea’s won appreciated 0.4 percent this week to 1,082.80 per dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar climbed 0.3 percent to S$1.2358 and Indonesia’s rupiah rose 0.1 percent to 8,543.
The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, advanced 0.3 percent in the last five days. Minutes released on May 18 of the Federal Reserve’s last meeting showed the central bank preferred to reverse record monetary stimulus by ending reinvestment of asset proceeds before raising interest rates.
Taiwan’s economy grew 6.55 percent in the first quarter from a year earlier, compared with a revised 7.13 percent in the fourth quarter, the statistics bureau said in Taipei on May 19. The preliminary estimate last month was 6.19 percent. Singapore’s gross domestic product will increase 5 percent to 7 percent this year, from an earlier forecast for 4 percent to 6 percent growth, the trade ministry said in a statement May 19.
Asian Economies
Emerging-market economies in Asia will expand 8.4 percent this year, compared with 2.4 percent growth in the world’s developed economies, according to forecasts made by the International Monetary Fund in April.
Malaysia’s ringgit pared a weekly loss on speculation policy makers will boost interest rates after inflation accelerated at the fastest pace since March 2009. The currency strengthened 0.2 percent yesterday to 3.0185 and fell 0.3 percent for the week. Consumer prices rose 3.2 percent from a year earlier in April, after increasing 3 percent the previous month. Bank Negara Malaysia said the local economy remains on a steady growth path.
“Inflation is still a worry, and the market is pricing in one more rate increase before the year ends,” said Zulkiflee Nidzam, head of foreign exchange and bond trading at Asian Finance Bank Bhd. in Kuala Lumpur.
Interest Rates
Bank Negara Malaysia lifted its overnight policy rate to 3 percent from 2.75 percent on May 5, the first increase since July, saying the local economy faces higher inflationary pressures in the second half.
The won’s appreciation was limited after the government said May 19 it will tighten limits on the amount of currency derivatives banks can hold. The finance ministry said local branches of overseas banks will be allowed to hold currency derivatives contracts equivalent to no more than 200 percent of equity capital, down from 250 percent, and the cap for domestic banks will be reduced to 40 percent from 50 percent.
Elsewhere, Thailand’s baht declined 0.3 percent this week to 30.30 per dollar, according to data compiled by Bloomberg. The Philippine peso and the Taiwan dollar were little changed at 43.225 and NT$28.780, respectively. China’s yuan advanced 0.08 percent to 6.4926, while India’s rupee weakened 0.1 percent to 45.015.
Source: www.bloomberg.com
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