Asian Currencies Gain, Led by Won, on Optimism Recovery Intact
September 02, 2010, 4:51 AM EDT
Sept. 2 (Bloomberg) -- South Korea’s won and the Philippine peso rose to a two-week high, pacing gains in regional currencies, after better-than-forecast U.S. economic data allayed concern that the global recovery is stalling.
The won strengthened for a second straight day as the International Monetary Fund raised South Korea’s economic growth forecast and said the nation’s currency was “undervalued.” The ringgit reached a 13-year high before a monetary policy meeting today and the Chinese yuan advanced after the central bank fixed the currency’s reference rate higher. The dollar dropped yesterday by the most in six weeks against the currencies of six major U.S. trading partners.
“Markets are recovering rapidly on good external data and it’s possible to see more currency appreciation,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “There is room for another rate increase” if the recovery trend is sustained, he said.
The won gained 0.3 percent to 1,180.90 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The Philippine peso climbed 0.3 percent to 45.02. Taiwan’s dollar rose 0.2 percent to NT$32.
The U.S. Institute for Supply Management’s factory index rose to a three-month high of 56.3 from 55.5 in July, the Arizona-based group said yesterday. The figure was projected to drop to 52.8 in a Bloomberg survey. Readings greater than 50 signal expansion.
Borrowing Costs
The won reached 1,177, the strongest level since Aug. 19, after the IMF said that the Bank of Korea still has room to lift borrowing costs. It also raised its growth forecast for the economy to 6.1 percent in 2010 from a July estimate of 5.75 percent. The central bank raised its benchmark rate on July 9 for the first time since the global financial crisis to 2.25 percent. Policy makers next meet on Sept. 9.
The IMF’s comments “affected the won,” said Kim Sung Soon, a currency dealer at Industrial Bank of Korea in Seoul. “There are some inflows from foreign stock and bond investors. The global sentiment is changing from risk aversion.”
Yuan Fixing
The Philippine peso rose for a second straight day after Finance Secretary Cesar Purisima said yesterday the budget deficit in 2011 may shrink to as little as 226 billion pesos ($5 billion), or 2.5 percent of gross domestic product, if the economy expands 7 percent. The government predicts a record deficit of 325 billion pesos this year. Growth in 2010 may exceed the top end of the targeted range of 5 percent to 6 percent, it said this week.
The yuan climbed as much as 0.2 percent to 6.7987 after the People’s Bank of China fixed the day’s reference rate 0.18 percent higher at 6.8003 per dollar, the biggest increase since July 2. It recently traded at 6.8100 in Shanghai.
“The fixing is now picking up a bit more of a correlation with the dollar,” said Robert Minikin, a senior foreign- exchange strategist at Standard Chartered Plc in Hong Kong. “We expect the yuan to remain on its appreciation path but it will be very gradual this year. The pace will accelerate next year.”
The baht’s rally this week to a two-year high was halted as Prime Minister Abhisit Vejjajiva met with economic ministers to discuss the currency and capital flows. Global funds put $505 million more into Thai stocks than they withdrew in August, exceeding combined net purchases for July and June, according to exchange data.
The ringgit was little changed at 3.1295 after reaching 3.1208, the strongest level since October 1997. Economists predicted Bank Negara Malaysia will keep its overnight rate at 2.75 percent following its policy meeting, according to 15 of 17 economists surveyed. Two predicted an increase to 3 percent.
Elsewhere, Indonesia’s rupiah fell 0.2 percent to 9,013 per dollar and the Singapore dollar gained 0.1 percent to S$1.3478. India’s rupee traded at 46.7925 versus 46.8125 yesterday.
--With assistance from Lilian Karunungan in Singapore, Yumi Teso in Bangkok and Belinda Cao in Beijing. Editors: Ven Ram, Simon Harvey
%VND %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY
September 02, 2010, 4:51 AM EDT
Sept. 2 (Bloomberg) -- South Korea’s won and the Philippine peso rose to a two-week high, pacing gains in regional currencies, after better-than-forecast U.S. economic data allayed concern that the global recovery is stalling.
The won strengthened for a second straight day as the International Monetary Fund raised South Korea’s economic growth forecast and said the nation’s currency was “undervalued.” The ringgit reached a 13-year high before a monetary policy meeting today and the Chinese yuan advanced after the central bank fixed the currency’s reference rate higher. The dollar dropped yesterday by the most in six weeks against the currencies of six major U.S. trading partners.
“Markets are recovering rapidly on good external data and it’s possible to see more currency appreciation,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “There is room for another rate increase” if the recovery trend is sustained, he said.
The won gained 0.3 percent to 1,180.90 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. The Philippine peso climbed 0.3 percent to 45.02. Taiwan’s dollar rose 0.2 percent to NT$32.
The U.S. Institute for Supply Management’s factory index rose to a three-month high of 56.3 from 55.5 in July, the Arizona-based group said yesterday. The figure was projected to drop to 52.8 in a Bloomberg survey. Readings greater than 50 signal expansion.
Borrowing Costs
The won reached 1,177, the strongest level since Aug. 19, after the IMF said that the Bank of Korea still has room to lift borrowing costs. It also raised its growth forecast for the economy to 6.1 percent in 2010 from a July estimate of 5.75 percent. The central bank raised its benchmark rate on July 9 for the first time since the global financial crisis to 2.25 percent. Policy makers next meet on Sept. 9.
The IMF’s comments “affected the won,” said Kim Sung Soon, a currency dealer at Industrial Bank of Korea in Seoul. “There are some inflows from foreign stock and bond investors. The global sentiment is changing from risk aversion.”
Yuan Fixing
The Philippine peso rose for a second straight day after Finance Secretary Cesar Purisima said yesterday the budget deficit in 2011 may shrink to as little as 226 billion pesos ($5 billion), or 2.5 percent of gross domestic product, if the economy expands 7 percent. The government predicts a record deficit of 325 billion pesos this year. Growth in 2010 may exceed the top end of the targeted range of 5 percent to 6 percent, it said this week.
The yuan climbed as much as 0.2 percent to 6.7987 after the People’s Bank of China fixed the day’s reference rate 0.18 percent higher at 6.8003 per dollar, the biggest increase since July 2. It recently traded at 6.8100 in Shanghai.
“The fixing is now picking up a bit more of a correlation with the dollar,” said Robert Minikin, a senior foreign- exchange strategist at Standard Chartered Plc in Hong Kong. “We expect the yuan to remain on its appreciation path but it will be very gradual this year. The pace will accelerate next year.”
The baht’s rally this week to a two-year high was halted as Prime Minister Abhisit Vejjajiva met with economic ministers to discuss the currency and capital flows. Global funds put $505 million more into Thai stocks than they withdrew in August, exceeding combined net purchases for July and June, according to exchange data.
The ringgit was little changed at 3.1295 after reaching 3.1208, the strongest level since October 1997. Economists predicted Bank Negara Malaysia will keep its overnight rate at 2.75 percent following its policy meeting, according to 15 of 17 economists surveyed. Two predicted an increase to 3 percent.
Elsewhere, Indonesia’s rupiah fell 0.2 percent to 9,013 per dollar and the Singapore dollar gained 0.1 percent to S$1.3478. India’s rupee traded at 46.7925 versus 46.8125 yesterday.
--With assistance from Lilian Karunungan in Singapore, Yumi Teso in Bangkok and Belinda Cao in Beijing. Editors: Ven Ram, Simon Harvey
%VND %KRW %USD %SGD %THB %PHP %TWD %IDR %MYR %HKD %CNY