Asian currencies rose for a fourth week, spurred by demand for higher-yielding assets after the US Federal Reserve pledged to keep interest rates near zero through late 2014.
The Bloomberg-JPMorgan Asia Dollar Index climbed to a three-month high as money managers plowed more cash into regional bonds and stocks. Malaysia’s ringgit hit a four-month high and India’s rupee touched the strongest level in 11 weeks.
Gains were limited by concern Europe will struggle to forge a debt-swap deal involving 206 billion euros (US$270 billion) of Greece’s repayment obligations.
“Regional currencies got a big boost this week from speculation that low interest rates in the US will encourage fund inflows,” said Kozo Hasegawa, a trader at Sumitomo Mitsui Banking Corp in Bangkok. “Still, with Europe’s debt concern lingering, it’s hard to see a sustained gain from here.”
The ringgit appreciated 2.2 percent to 3.0388 per US dollar in Kuala Lumpur, according to data compiled by Bloomberg.
The rupee gained 2.1 percent to 49.315 against the US currency and touched 49.295 on Friday, the highest level since Nov. 9.
The Philippine peso and South Korea’s won advanced 1 percent to 42.85 and 1,123.20, respectively. Thailand’s baht strengthened 0.7 percent to 31.31.
The Asia Dollar Index rose 1.8 percent this month, the most in a January since 2006, as central banks in India, Thailand, Indonesia and the Philippines eased credit conditions to bolster economic growth.
The Fed said on Wednesday that they saw “exceptionally low” interest rates through 2014, having previously pledged to refrain from raising borrowing costs until at least the middle of next year.
The central bank kept its target rate between zero and 0.25 percent, unchanged since December 2008, to secure a recovery from the global credit-market crisis. Greece needs to repay 14.5 billion euros of debt in March.
Emerging-market bond funds saw inflows of US$907 million in the week through Thursday, Barclays Capital said in a note to clients on Friday, citing data from EPFR Global. Investors bought US$1.4 billion more stocks than they sold in South Korea, the Philippines and Thailand in the first four days of this week, exchange data showed.
“It’s the start of a technical correction,” said Rafael Algarra, executive vice president and head of financial markets at Security Bank Corp in Manila. “We’ve seen a run on the peso mostly because of the offshore news. People are looking for an excuse to take profits on this long run.”
Elsewhere, Indonesia’s rupiah declined 0.2 percent on Friday to 8,983 per US dollar, taking its loss this week to 0.4 percent, according to prices from local banks compiled by Bloomberg. The Vietnamese dong fell 0.6 percent to 21,023.
Financial markets in Taiwan and China were closed all week for the Lunar New Year holiday.