Bloomberg
Singapore Leads Gains in Asian Currencies After Revaluation
April 14, 2011, 12:38 AM EDT
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By Fion Li
April 14 (Bloomberg) -- Singapore’s dollar led gains in most Asian currencies as the city-state’s central bank said it would allow faster appreciation to combat inflation after its economy grew quicker than economists forecast.
The Monetary Authority of Singapore said it will re-center the currency’s band upwards, after gross domestic product increased at an annualized rate of 23.5 percent in the first quarter from the previous three months, more than double the 11.4 percent predicted in a Bloomberg survey of economists.
“There’s been a lot of bullish trade riding on the back of the Singapore policy review,” said Suresh Kumar Ramanathan, a strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “The market is left to guess where the mid-point of the Singapore currency band is, so any upside will likely be limited.”
The Singapore dollar jumped 0.5 percent to 1.2492 per dollar as of 12:08 p.m. local time, according to data compiled by Bloomberg. The Taiwan dollar rose 0.3 percent to NT$28.990 and Indonesia’s rupiah gained 0.1 percent to 8,655.
Taiwan’s dollar strengthened for a second day on speculation exporters are converting their earnings to take advantage of the currency’s recent weakness.
“We see this as a temporary strengthening in the Taiwan dollar,” said Suan Teck Kin, an economist at United Overseas Bank Ltd. in Singapore. “You have these export earnings being converted into Taiwan dollars.”
Chinese Inflation
China’s yuan traded near its strongest level in 17 years on speculation the central bank will tighten monetary policy further to tame inflation. The currency was little changed at 6.5339 per dollar.
Policy makers will likely ask banks to set aside more cash as reserves in the “near future,” the China Securities Journal said in a front-page commentary. A government report tomorrow will show the consumer price index rose 5.2 percent in March from a year earlier, the most since July 2008, according to the median estimate of economists surveyed by Bloomberg.
The government will also report tomorrow that gross domestic product rose 9.4 percent from a year earlier last quarter, after increasing 9.8 percent in the previous three months, according to another Bloomberg survey.
“GDP growth is still going to be strong and price pressures remain,” said Patrick Bennett, a Hong Kong-based strategist at Standard Bank Group Ltd. “China will respond by tightening policy with a combination of stronger currency, hikes in interest rates and the reserve ratio.”
South Korea’s won declined on speculation policy makers will step in to restrain the currency if it rises to the 1,080 per dollar level. The currency fell 0.1 percent to 1089.10 per dollar, touching 1,085.50 earlier, the strongest level since April 11.
Elsewhere, Malaysia’s ringgit and the Philippine peso were little changed at 3.0240 and 43.247, respectively, according to data compiled by Bloomberg. India and Thailand’s financial markets are closed for holidays.
--With assistance from Lilian Karunungan and David Yong in Singapore and Seyoon Kim in Seoul. Editors: Andrew Janes, Sandy Hendry
%VND %KRW %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY
To contact the reporter on this story: Fion Li in Hong Kong at
fli59@bloomberg.netTo contact the editor responsible for this story: Sandy Hendry at
shendry@bloomberg.net
