Asian currencies strengthened this week, with Singapore’s dollar reaching a record and Malaysia’s ringgit a 13-year high, on speculation regional central banks will keep raising borrowing costs to curb inflation.
The Bloomberg-JPMorgan Asia Dollar index rose to its highest level since 1997 as overseas investors bought a combined US$1.7 billion more stocks than they sold in India, South Korea, Taiwan and Thailand this week, according to exchange data.
The Bank of Thailand lifted interest rates on Wednesday for the sixth time in less than a year and signaled more tightening is likely. Malaysia reported the same day that consumer prices rose 3 percent last month from a year earlier, the most since April 2009.
“Inflation pressure raises the possibility of a rate increase next month, which supports the ringgit,” said Suresh Kumar Ramanathan, foreign-exchange strategist at Kuala Lumpur-based CIMB Investment Bank BHD. “US dollar funding costs are still low and investors are going long [on] Asian currencies.”
Singapore’s dollar gained 1 percent for the week to S$1.2333 against its US counterpart and touched S$1.2329, the strongest level since at least 1981. The ringgit rose 0.6 percent to 3.0045 in Kuala Lumpur and reached 3.0034, the highest level since October 1997.
The New Taiwan dollar rose to the strongest level in more than two months after the government reported on Wednesday export orders climbed 13.4 percent to a record US$38.9 billion last month as a drop in shipments to Japan was compensated for by increases to the US and China.
“The export orders figures showed Taiwan’s exports remain competitive,” said Henry Lin, a Taipei-based foreign-exchange trader at Shin Kong Commercial Bank (新光銀行). “The appreciating trend will probably continue next week and the currency may test the NT$28.7 level.”
The NT dollar strengthened 0.4 percent this week to NT$28.930, according to Taipei Forex Inc. The currency touched NT$28.860 on Friday, the strongest level since Feb. 10.
The South Korean won slipped 0.1 percent on Friday to 1,080.80 per US dollar on speculation the central bank would intervene to curb appreciation. Gains halted at 1,078.30 on Thursday, matching the highs set on Sept. 8, 2008, and Aug. 28, 2008, creating resistance for the local currency, or a level at which sell orders are clustered. For the week, the won appreciated 0.8 percent.
China’s yuan climbed to the highest level since 2007 on speculation the central bank will allow faster currency gains to help temper inflation.
The currency appreciated 0.2 percent to 6.5067 per US dollar in the spot market yesterday and touched a 17-year high of 6.5067, according to the China Foreign Exchange Trade System.
Elsewhere, Indonesia’s rupiah gained 0.5 percent this week to 8,623 per dollar and Thailand’s baht strengthened 0.7 percent to 29.94. India’s rupee and the Philippine peso were little changed at 44.3675 and 43.285.
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