Asian currencies completed their first weekly advance since October after joint efforts by monetary authorities to tackle Europe’s debt crisis bolstered sentiment toward higher-yielding assets.
The Bloomberg-JPMorgan Asia Dollar Index reached the highest level in more than two weeks on Friday after six central banks led by the US Federal Reserve agreed on Wednesday to reduce emergency borrowing costs for US dollars. The yuan gained for a second day on Friday after the People’s Bank of China cut banks’ reserve-requirement ratios for the first time since 2008.
The New Taiwan dollar halted a four-week decline and strengthened 1 percent this week to NT$30.16 against its US counterpart, according to Taipei Forex Inc.
“The [New] Taiwan dollar is benefiting from the general improvement in risk appetite,” said Thio Chin Loo, a Singapore- based senior currency analyst at BNP Paribas SA. “But the currency will face a downside risk since the central bank might cut interest rates as economic indicators are pointing to slower growth.”
The central bank is scheduled to review borrowing costs on Dec. 29.
The won posted its first weekly gain since October, strengthening 2.9 percent this week to 1,131.30 per US dollar, according to data compiled by Bloomberg.
Malaysia’s ringgit climbed 2.6 percent to 3.1205, while Thailand’s baht and India’s rupee jumped 2 percent to 30.80 and 51.2063 respectively.
The baht had its biggest weekly advance since July after the Thai central bank signaled it would boost economic growth by easing monetary policy as needed. The Bank of Thailand cut its benchmark one-day bond repurchase rate by 25 basis points to 3.25 percent on Wednesday.
Global funds bought US$2.4 billion more South Korean, Taiwanese and Thai equities than they sold this week, exchange data show.
“Market players have welcomed moves by the central banks, which is improving sentiment,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok. “We are seeing some fund inflows into the region, supporting the currencies.”
China’s yuan strengthened 0.24 percent this week to 6.3597 per US dollar, according to the China Foreign Exchange Trade System. The People’s Bank of China raised its daily reference rate by 0.07 percent to 6.3310 per US dollar on Friday, the strongest level since Nov. 14.
Elsewhere, the Philippine peso appreciated 1.5 percent this week to 43.27 per US dollar, while the Indonesian rupiah was unchanged at 9,055.