Asian currencies strengthened for a third week, the longest run of gains since October, as overseas investors added to holdings of regional assets to benefit from the world’s fastest economic growth.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies, rose to a 13-year high as funds based abroad bought about US$3 billion more South Korean, Taiwanese and Thai equities than they sold this week. Taiwan, China, India, Indonesia, South Korea, the Philippines and Thailand have all raised interest rates this year to tame inflation, boosting the yield advantage over developed nations.
“Asian currencies are still benefiting from a positive risk environment for the moment,” said Christopher Gothard, head of foreign exchange at Brown Brothers Harriman (Hong Kong) Ltd. “The growth outlook remains pretty strong, while some central banks look to be making efforts to get to grips with rising inflation.”
The New Taiwan dollar appreciated 1.1 percent to NT$28.991 against the greenback this week, according to Taipei Forex Inc. India’s rupee gained 1.2 percent to 44.0790, the Philippine peso advanced 0.9 percent to 43 and the Thai baht climbed 0.8 percent to 30.04.
Emerging-market economies in Asia will expand 8.4 percent this year, compared with 2.5 percent growth in advanced countries, according to estimates released by the IFM in January. Benchmark interest rates in Indonesia and India are 6.75 percent and China’s one-year lending rate is 6.31 percent, compared with a maximum of 0.25 percent in the US and Japan.
China’s yuan strengthened for a fourth week, the longest run of gains this year. The yuan rose 0.19 percent from a week ago to 6.5354 per dollar, according to the China Foreign Exchange Trade System. It touched 6.5350 on Friday, the strongest level since the country unified official and market exchange rates at the end of 1993.
Taiwan’s currency had its biggest weekly advance in three months. The consumer price index climbed 1.41 percent last month from a year earlier, less than the 1.70 percent median estimate of economists surveyed by Bloomberg, official data showed on Wednesday. That’s the lowest among Asia’s 10 biggest emerging economies, according to data compiled by Bloomberg.
“Foreign inflows supported the Taiwan dollar this week,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong. “The lower-than-expected inflation number also helped the rally.”
South Korea’s won rose for a third week, climbing 0.8 percent to 1,083.03 per dollar. Policy makers will let the currency gain to curb inflation, Barclays Capital said ahead of an interest-rate review on Tuesday.
Elsewhere, Indonesia’s rupiah added 0.6 percent this week to 8,648 per dollar, according to data compiled by Bloomberg. The Singapore dollar rose 0.4 percent to S$1.2570 and Malaysia’s ringgit gained 0.3 percent to 3.0165.
The euro rose to a 15-month high against the dollar as the European Central Bank increased interest rates for the first time since the financial crisis and amid concern the US is debasing its currency.
The US dollar fell for a second week versus the euro as US lawmakers remained in a stalemate on a federal budget. The yen weakened as the Bank of Japan added to economic stimulus to help the nation’s economy recover from last month’s earthquake.
The euro rose 1.7 percent in New York to US$1.4483, from the US$1.4237 it saw on April 1. It touched US$1.4444, the highest level since January last year. The yen declined 2.6 percent to ¥122.76 per euro, reaching ¥123.08, the weakest since May last year. Japan’s currency lost 0.8 percent to ¥84.76 per dollar.
The pound had its biggest weekly gains versus the dollar since February after reports showing producer prices surged and services industries’ growth accelerated bolstered the case for higher interest rates.
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