Asian currencies strengthened for a second week, led by South Korea’s won and Malaysia’s ringgit, as optimism that the global economic recovery is intact bolstered demand for emerging market assets.
The Bloomberg-JPMorgan Asia Dollar Index touched a two-week high on Friday and the region’s stocks completed a second weekly advance as global investors pumped more than US$1.6 billion into equities in South Korea and Taiwan.
India’s economy expanded faster than economists estimated and South Korea’s current- account surplus rose to a nine-month high, separate reports showed this week.
“When concerns over the global economy and volatility ease, money comes back to Asia,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp in Bangkok.
The won appreciated 1.8 percent this week to 1,063.02 against the US dollar in Seoul, according to data compiled by Bloomberg. Malaysia’s ringgit gained 0.8 percent to 2.948 and the Philippine peso rose 0.7 percent to 42.145. India’s rupee strengthened 0.8 percent to 45.805.
The New Taiwan dollar strengthened 0.1 percent this week to NT$29.025 versus the greenback, and was down 0.2 percent on Friday, according to Taipei Forex Inc.
South Korea’s current-account surplus increased to US$4.94 billion in July, the most since October last year, an official report showed on Monday.
India’s GDP gained 7.7 percent last quarter from a year earlier, beating the median estimate of 7.6 percent in a Bloomberg survey of economists.
Orders placed with US factories rose 2.4 percent in July, the most in four months, a Commerce Department report showed.
In China, the Purchasing Managers’ Index, a local measure of manufacturing output, rose to 50.9 last month from 50.7 a month earlier, the China Federation of Logistics and Purchasing said on Friday. A reading above 50 signals expansion.
The won had its biggest weekly gain in five months as faster inflation fanned speculation that policy makers would tolerate currency gains. Consumer prices rose 5.3 percent from a year earlier last month after increasing 4.7 percent in July, the government said on Thursday.
The ringgit completed its biggest weekly gain since July. It advanced 0.6 percent on Friday from its close on Monday, the last day of trading before local financial markets closed for a three-day holiday that ended on Thursday.
Foreign investors boosted investments in Malaysia’s local-currency debt by 1.1 percent in July to 186.5 billion ringgit (US$62.8 billion), according to data published by the central bank on its Web site. Their holdings of government bonds increased 4.1 percent, the figures showed.
“The market continues to look at US and European data for signals and on balance, it’s still not conclusive we are going to get a global recession,” said Wong Kah Guan, a currency forwards trader at CIMB Investment Bank BHD in Kuala Lumpur.
“Asian central banks may keep policy rates on hold and not cut so soon,” preserving the yield advantage on regional assets, he said.
Singapore’s dollar rose 0.3 percent this week to S$1.2036 per US dollar and Thailand’s baht appreciated 0.2 percent to 29.93.
China’s yuan gained 0.1 percent to 6.3868. The currency touched 6.3705 on Tuesday, the strongest level since the country unified the official and market exchange rates at the end of 1993.