Asian Currencies Strengthen on Signs U.S. May Avert Double-Dip
September 06, 2010, 5:42 AM EDT
Sept. 6 (Bloomberg) -- Asian currencies rose, led by the Philippine peso and South Korea’s won, as signs the U.S. will avoid a double-dip recession brightened the outlook for exports and boosted demand for riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index and the MSCI Asia Pacific Index of regional stocks climbed to their highest levels in almost a month after data last week showed U.S. employment growth and manufacturing output beat estimates, while retail sales improved and pending home sales unexpectedly rose. Malaysia’s ringgit and Thailand’s baht touched 13-year highs, while China’s yuan gained the most in nearly three weeks.
“The biggest risk for Asia is the U.S. and if you don’t have a double-dip recession there, but a modest recovery, then Asia’s positive factors will dominate sentiment,” said Thomas Harr, head of Asia foreign-strategy at Standard Chartered Plc in Singapore. “There is also a bias for currency appreciation to tackle inflation” in the region, he said.
The Philippine peso rose 0.7 percent to 44.378, while South Korea’s won gained 0.4 percent to 1,170.45. Singapore’s dollar climbed 0.2 percent to S$1.3441 as of 5:17 p.m. local time and earlier reached S$1.3426, the strongest level since at least 1981, according to data compiled by Bloomberg.
All three currencies appreciated for a fourth day after a U.S. government report on Sept. 3 showed private payrolls in the world’s largest economy climbed 67,000 in August, more than the 40,000 gain forecast by economists in a Bloomberg survey. The Dollar Index, a gauge of the greenback’s strength, touched its lowest level since Aug. 11 as investors favored higher-yielding currencies.
Global Demand
“The Korean economy is connected to global demand,” said Sam Hong, a currency dealer at Shinhan Bank in Seoul. “The offshore players have sold a lot of dollars.”
The peso reached a four-month high of 44.365 versus the dollar after central bank Governor Amando Tetangco said Sept. 3 that the nation’s foreign-exchange reserves may exceed $50 billion this year for the first time. The surplus on the balance of payments likely widened in August, from $91 million in July, and will provide “fundamental support” to the peso, he said.
Singapore’s dollar rose on speculation foreign investors seeking exposure to Asia will buy the nation’s assets as the economy is set to become the world’s fastest growing this year.
“Singapore will continue to be a proxy for Asia as its economic fundamentals are very strong and if we think Asian currencies are going higher, then definitely the Singapore dollar will head up,” Standard Chartered’s Harr said. The bank last week lifted its year-end forecast for the currency to S$1.33 versus the greenback, from S$1.35.
Stronger Yuan
China’s yuan strengthened 0.2 percent to 6.7877 per dollar, its biggest gain since Aug. 17, on speculation appreciation will accelerate as the dollar weakens and the U.S. government presses for gains.
The currency earlier reached a two-week high of 6.7855 as Larry Summers, head of President Barack Obama’s National Economic Council, started a meeting today in Beijing with Li Yuanchao, head of the Communist Party’s organization department. The People’s Bank of China has allowed the yuan to rise 0.6 percent since a two-year peg was scrapped on June 19 in favor of managing the exchange rate against a basket of currencies.
“Summers will definitely press China for more appreciation in the yuan because the amount China has allowed is far less than what the U.S. Congress desires,” said Ken Peng, a Beijing- based economist at Citigroup Inc. “The U.S. dollar’s slump is also an important driving force.”
Elsewhere, the Malaysian ringgit rose 0.2 percent to 3.1148 per dollar, after earlier touching 3.1098, its strongest level since October 1997. Thailand’s baht reached a high of 31.06 before trading 0.2 percent stronger at 31.14. The Indonesian rupiah climbed 0.1 percent to 8,991 and Taiwan’s dollar advanced 0.2 percent to NT$31.948.
September 06, 2010, 5:42 AM EDT
Sept. 6 (Bloomberg) -- Asian currencies rose, led by the Philippine peso and South Korea’s won, as signs the U.S. will avoid a double-dip recession brightened the outlook for exports and boosted demand for riskier assets.
The Bloomberg-JPMorgan Asia Dollar Index and the MSCI Asia Pacific Index of regional stocks climbed to their highest levels in almost a month after data last week showed U.S. employment growth and manufacturing output beat estimates, while retail sales improved and pending home sales unexpectedly rose. Malaysia’s ringgit and Thailand’s baht touched 13-year highs, while China’s yuan gained the most in nearly three weeks.
“The biggest risk for Asia is the U.S. and if you don’t have a double-dip recession there, but a modest recovery, then Asia’s positive factors will dominate sentiment,” said Thomas Harr, head of Asia foreign-strategy at Standard Chartered Plc in Singapore. “There is also a bias for currency appreciation to tackle inflation” in the region, he said.
The Philippine peso rose 0.7 percent to 44.378, while South Korea’s won gained 0.4 percent to 1,170.45. Singapore’s dollar climbed 0.2 percent to S$1.3441 as of 5:17 p.m. local time and earlier reached S$1.3426, the strongest level since at least 1981, according to data compiled by Bloomberg.
All three currencies appreciated for a fourth day after a U.S. government report on Sept. 3 showed private payrolls in the world’s largest economy climbed 67,000 in August, more than the 40,000 gain forecast by economists in a Bloomberg survey. The Dollar Index, a gauge of the greenback’s strength, touched its lowest level since Aug. 11 as investors favored higher-yielding currencies.
Global Demand
“The Korean economy is connected to global demand,” said Sam Hong, a currency dealer at Shinhan Bank in Seoul. “The offshore players have sold a lot of dollars.”
The peso reached a four-month high of 44.365 versus the dollar after central bank Governor Amando Tetangco said Sept. 3 that the nation’s foreign-exchange reserves may exceed $50 billion this year for the first time. The surplus on the balance of payments likely widened in August, from $91 million in July, and will provide “fundamental support” to the peso, he said.
Singapore’s dollar rose on speculation foreign investors seeking exposure to Asia will buy the nation’s assets as the economy is set to become the world’s fastest growing this year.
“Singapore will continue to be a proxy for Asia as its economic fundamentals are very strong and if we think Asian currencies are going higher, then definitely the Singapore dollar will head up,” Standard Chartered’s Harr said. The bank last week lifted its year-end forecast for the currency to S$1.33 versus the greenback, from S$1.35.
Stronger Yuan
China’s yuan strengthened 0.2 percent to 6.7877 per dollar, its biggest gain since Aug. 17, on speculation appreciation will accelerate as the dollar weakens and the U.S. government presses for gains.
The currency earlier reached a two-week high of 6.7855 as Larry Summers, head of President Barack Obama’s National Economic Council, started a meeting today in Beijing with Li Yuanchao, head of the Communist Party’s organization department. The People’s Bank of China has allowed the yuan to rise 0.6 percent since a two-year peg was scrapped on June 19 in favor of managing the exchange rate against a basket of currencies.
“Summers will definitely press China for more appreciation in the yuan because the amount China has allowed is far less than what the U.S. Congress desires,” said Ken Peng, a Beijing- based economist at Citigroup Inc. “The U.S. dollar’s slump is also an important driving force.”
Elsewhere, the Malaysian ringgit rose 0.2 percent to 3.1148 per dollar, after earlier touching 3.1098, its strongest level since October 1997. Thailand’s baht reached a high of 31.06 before trading 0.2 percent stronger at 31.14. The Indonesian rupiah climbed 0.1 percent to 8,991 and Taiwan’s dollar advanced 0.2 percent to NT$31.948.