Asian currencies completed their first weekly advance in a month, led by Malaysia’s ringgit, as optimism European officials would contain the region’s debt crisis helped revive demand for emerging-market assets.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.5 percent this week as the European Central Bank (ECB) outlined plans to pump cash into the debt-ridden economy. The ringgit and the New Taiwan dollar gained as reports on Friday showed export growth accelerated. Global funds bought a combined US$403 million more of South Korean, Taiwanese and Thai shares than they sold on Thursday, exchange data show.
“Markets appear to have taken it positively that the ECB provided extraordinary liquidity measures at its policy meeting,” said Nick Verdi, a Singapore-based currency strategist at Barclays Capital. “We have very positive fundamental views on a number of Asian currencies. Given the risks emanating from Europe which will persist in the near term, the volatility isn’t likely to fall.”
The ringgit gained 1.1 percent this week to 3.1608 per US dollar yesterday in Kuala Lumpur, snapping four weeks of declines, according to data compiled by Bloomberg.
The NT dollar had its worst month in September since 1997, prompting central bank Governor Perng Fai-nan (彭淮南) to say on Wednesday policymakers don’t favor a weaker currency.
Bank Indonesia will continue to purchase government debt to stabilize the rupiah, Hendar, the central bank’s director of monetary policy who uses only one name, said in a mobile-phone text message on Monday. Thailand’s central bank also said this week it entered the market to curb volatility.
The NT dollar advanced to its strongest level this week and bonds fell as international funds boosted holdings of local stocks on optimism the Taiwanese economy would withstand the fallout of slowing global growth.
Overseas funds bought US$249 million more Taiwanese stocks than they sold on Thursday, the most in three weeks, and added another US$92.7 million on Friday, according to exchange data.
Taiwanese exports rose 9.9 percent last month from a year earlier, following a 7.2 percent increase in August, the government reported toward the end of currency trading.
The NT dollar increased 0.4 percent on Friday to NT$30.49 against the greenback and was little changed from last week. Local financial markets will be closed for the Double Ten National Day holiday tomorrow.
“Looks like Taiwan’s economy is still doing fine, and investors are also hoping Europe’s crisis won’t get any worse,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co (國泰世華銀行). “Trading volume is thin before the long weekend.”
The Philippine peso gained 0.4 percent to 43.545 and the South Korean won jumped 1.1 percent to 1,178.40 on Friday and was little changed from last week.
Malaysian exports climbed 10.9 percent in August from a year earlier, the most in four months, according to a trade ministry statement on Friday. Shipments from Taiwan rose 9.9 percent last month, the Ministry of Finance said on Friday. That compared with a gain of 7.2 percent in the prior month and the median estimate of 9.6 percent in a Bloomberg survey.
The baht strengthened 0.5 percent on Friday and 0.5 percent this week to 30.94 per US dollar in Bangkok, according to data compiled by Bloomberg.
Data this week showed currency reserves in Taiwan fell by a record US$11.2 billion last month, while South Korea’s stockpile shrank by the most in three years, indicating central banks sold US dollars to support local currencies. Indonesian holdings dropped US$10 billion last month from a record US$124.6 billion in August, the bank reported on Thursday.
India’s rupee gained 0.4 percent on Friday to 49.1550 per US dollar, paring its drop for the week to 0.4 percent. Indonesia’s rupiah declined 0.1 percent on Friday and 1.2 percent this week to 8,900, according to prices from local banks compiled by Bloomberg.
Markets in China are shut this week for the National Day holidays.
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