Asian currencies advanced to a 14-year high after European leaders pledged more aid for Greece, easing concern the debt crisis will worsen and bolstering demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, reached the highest level since August 1997 and completed a weekly gain after the package was announced. China’s yuan rose to a 17-year high on Friday, the Philippine peso reached a three-year peak and South Korea’s won touched the strongest level since August 2008.
“It’s quite clear that the risk environment has improved significantly as the European summit agreement has helped to calm fears over the debt problems in Europe,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd (新加坡銀行).
The New Taiwan dollar strengthened 0.2 percent this week to NT$28.83 against its US counterpart.
The peso strengthened 1.3 percent this week to 42.403 versus the US dollar in Manila. Malaysia’s ringgit appreciated 1 percent to 2.9755, Thailand’s baht climbed 0.8 percent to 29.83, Singapore’s dollar added 0.8 percent to S$1.2091 and the won rose 0.6 percent to 1,051.98.
The ringgit reached a two-month high on speculation the central bank will raise borrowing costs after Central Bank of Malaysia Governor Zeti Akhtar Aziz said curbing inflation was a priority. Consumer prices in Malaysia rose to a two-year high of 3.5 percent last month, according to official data released Wednesday.
“The ringgit could hold on to its strength as there are growing expectations that the Malaysian central bank will raise its policy rate,” said Calbert Loh, head of treasury at Bangkok Bank BHD in Kuala Lumpur.
The peso gained the most this week since September last year after the IMF said on Wednesday that the near-term outlook for the Philippines was favorable.
“The fundamentals, growth prospects and the fiscal side remain positive in the Philippines,” said Lito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila.
The baht had a third weekly advance as overseas investors added to their holdings of the nation’s stocks. Global funds bought US$370 million more Thai equities than they sold this week through Thursday, taking this month’s net purchases to US$762 million.
Indonesia’s rupiah appreciated 0.3 percent this week to 8,523 per US dollar after Fitch Ratings said on Tuesday that the country might achieve an investment-grade credit rating before the end of next year. Fitch rates Indonesia “BB+,” one step below investment grade.
Elsewhere, China’s yuan posted its biggest weekly gain in three months after the central bank signaled it favors a stronger currency to curb inflation. The currency advanced 0.27 percent to 6.4455 per US dollar, while India’s rupee added 0.3 percent to 44.3950.
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