Asian Currencies Rise, Led by Ringgit, on Yuan Gain Prospects
April 20, 2010, 5:47 AM EDT
More From Businessweek
By Patricia Lui
April 20 (Bloomberg) -- Asian currencies rose, led by Malaysia’s ringgit, as speculation China will allow the yuan to strengthen brightens the outlook for regional trade and helps attract global funds.
The Bloomberg-JPMorgan Asia Dollar Index and the MSCI Asia Pacific Index gained for the first time in at least three days after reports saying U.S. regulators were split over whether to sue Goldman Sachs Group Inc. for fraud damped concern financial markets will become more volatile. Yuan forwards halted a two- day decline on speculation China will face calls to let its currency strengthen at a G-20 meeting in Washington this week.
“Traders are using yesterday’s reversal as an opportunity to get back into Asian currencies,” said Wai Ho Leong, a regional economist at Barclays Plc in Singapore. “The growth and bullish trend in Asia are still intact, and there is intense speculation about when China will act on the yuan, benefitting proxy currencies like the ringgit, won and the Taiwan dollar.”
Malaysia’s ringgit rose 0.5 percent to 3.2070 per dollar as of 4:52 p.m. in Singapore, according to Bloomberg data. Singapore’s dollar strengthened 0.4 percent to S$1.3758, while Indonesia’s rupiah climbed 0.3 percent to 9,013 per dollar.
All three currencies fell yesterday and stock benchmarks declined across the region after the U.S. Securities and Exchange Commission on April 16 announced plans to sue Goldman Sachs for fraud tied to collateralized debt obligations. The U.S. bank has denied any wrongdoing and people familiar with the matter told Bloomberg that Securities and Exchange Commission officials were split 3-2 over whether to file the lawsuit.
‘Less Fear’
“The damage to Goldman is not as dramatic as people feared,” said Dariusz Kowalczyk, Hong Kong-based chief investment strategist for SJS Markets Ltd. There is “less fear that there will be an attack on investment banking,” he said.
Twelve-month non-deliverable yuan forwards gained 0.1 percent to trade at 6.6235 per dollar, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 3 percent from the spot rate of 6.8256.
The U.S. will take action over the yuan, possibly by bringing a case to the World Trade Organization, should multilateral pressure fail to work, House Ways and Means Committee Chairman Sander Levin said yesterday.
“U.S. lawmakers are expected to be loud in wielding the trade stick to persuade China to revalue,” Philip Wee, a Singapore-based senior currency economist at DBS Group Holdings Ltd., wrote in a note today. The G-20 meeting “will be the first test by the U.S. to use a multilateral forum to press China into action on its currency.”
Emerging-Market Assets
Malaysia’s ringgit rebounded from yesterday’s 1 percent slide, its biggest loss in a year, on speculation emerging- market assets will remain in demand as the U.S. maintains near- zero interest rates to spur growth.
Federal Reserve Bank of Chicago President Charles Evans said yesterday the U.S. should maintain its low interest-rate policy even as the economy is “experiencing a recovery.” Economists predict a statistics department report tomorrow will show Malaysia’s inflation quickened in March, supporting the case for the central bank to add to last month’s rate increase.
“The recovery story argues for stronger currencies and higher rates, especially in Asia where growth has been good,” said Choong Yin Pheng, manager of economic and fixed-income research at Hong Leong Bank Bhd. in Kuala Lumpur. “There’s still potential upside from the pressure on yuan revaluation.”
The Thai baht advanced 0.3 percent to 32.19, while the Philippine peso climbed 0.2 percent to 44.56. Taiwan’s dollar rose 0.1 percent to NT$31.45.
April 20, 2010, 5:47 AM EDT
More From Businessweek
By Patricia Lui
April 20 (Bloomberg) -- Asian currencies rose, led by Malaysia’s ringgit, as speculation China will allow the yuan to strengthen brightens the outlook for regional trade and helps attract global funds.
The Bloomberg-JPMorgan Asia Dollar Index and the MSCI Asia Pacific Index gained for the first time in at least three days after reports saying U.S. regulators were split over whether to sue Goldman Sachs Group Inc. for fraud damped concern financial markets will become more volatile. Yuan forwards halted a two- day decline on speculation China will face calls to let its currency strengthen at a G-20 meeting in Washington this week.
“Traders are using yesterday’s reversal as an opportunity to get back into Asian currencies,” said Wai Ho Leong, a regional economist at Barclays Plc in Singapore. “The growth and bullish trend in Asia are still intact, and there is intense speculation about when China will act on the yuan, benefitting proxy currencies like the ringgit, won and the Taiwan dollar.”
Malaysia’s ringgit rose 0.5 percent to 3.2070 per dollar as of 4:52 p.m. in Singapore, according to Bloomberg data. Singapore’s dollar strengthened 0.4 percent to S$1.3758, while Indonesia’s rupiah climbed 0.3 percent to 9,013 per dollar.
All three currencies fell yesterday and stock benchmarks declined across the region after the U.S. Securities and Exchange Commission on April 16 announced plans to sue Goldman Sachs for fraud tied to collateralized debt obligations. The U.S. bank has denied any wrongdoing and people familiar with the matter told Bloomberg that Securities and Exchange Commission officials were split 3-2 over whether to file the lawsuit.
‘Less Fear’
“The damage to Goldman is not as dramatic as people feared,” said Dariusz Kowalczyk, Hong Kong-based chief investment strategist for SJS Markets Ltd. There is “less fear that there will be an attack on investment banking,” he said.
Twelve-month non-deliverable yuan forwards gained 0.1 percent to trade at 6.6235 per dollar, according to data compiled by Bloomberg. The contracts reflect bets the currency will strengthen 3 percent from the spot rate of 6.8256.
The U.S. will take action over the yuan, possibly by bringing a case to the World Trade Organization, should multilateral pressure fail to work, House Ways and Means Committee Chairman Sander Levin said yesterday.
“U.S. lawmakers are expected to be loud in wielding the trade stick to persuade China to revalue,” Philip Wee, a Singapore-based senior currency economist at DBS Group Holdings Ltd., wrote in a note today. The G-20 meeting “will be the first test by the U.S. to use a multilateral forum to press China into action on its currency.”
Emerging-Market Assets
Malaysia’s ringgit rebounded from yesterday’s 1 percent slide, its biggest loss in a year, on speculation emerging- market assets will remain in demand as the U.S. maintains near- zero interest rates to spur growth.
Federal Reserve Bank of Chicago President Charles Evans said yesterday the U.S. should maintain its low interest-rate policy even as the economy is “experiencing a recovery.” Economists predict a statistics department report tomorrow will show Malaysia’s inflation quickened in March, supporting the case for the central bank to add to last month’s rate increase.
“The recovery story argues for stronger currencies and higher rates, especially in Asia where growth has been good,” said Choong Yin Pheng, manager of economic and fixed-income research at Hong Leong Bank Bhd. in Kuala Lumpur. “There’s still potential upside from the pressure on yuan revaluation.”
The Thai baht advanced 0.3 percent to 32.19, while the Philippine peso climbed 0.2 percent to 44.56. Taiwan’s dollar rose 0.1 percent to NT$31.45.