Asian currencies gained this week for the first time since April on optimism stimulus measures in the world’s largest economies will support regional exports.
Policymakers in China cut their deposit rate by 25 basis points to 3.25 percent, while South Korea kept the seven-day repurchase rate unchanged at 3.25 percent on Friday. Philippine President Benigno Aquino III said he expects better growth in the coming quarters, after the Philippine economy expanded at the fastest pace since 2010 last quarter. Asian currencies pared their weekly advance after US Federal Reserve Chairman Ben Bernanke said fresh monetary stimulus would need further assessment.
“China has the scope to take more measures to cushion the economic slowdown,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd (新加坡銀行). “The outlook for Asian economies is still cloudy because the global situation, especially in Europe, is still one of muddling along.”
The New Taiwan dollar slipped 0.2 percent on the week to close at NT$29.976.
Malaysia’s ringgit led with a 0.8 percent weekly advance to 3.185 versus its US counterpart. The peso gained 0.3 percent to 43.27 and South Korea’s won rose 0.2 percent to 1,175.3. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, climbed 0.2 percent to 114.16 this week. The gauge declined in each of the past five weeks, the longest losing streak since 2008.
The MSCI Asia Pacific Index of regional shares dropped 1.3 percent on Friday, halting a three-day advance and trimming its gain for the week to 0.1 percent, after Bernanke told US lawmakers the central bank would assess economic conditions before deciding if a third round of so-called quantitative easing is needed.
“There are still jitters on the global front and at best the US wants to keep the QE3 possibility vague for now,” said Enrico Tanuwidjaja, a Singapore-based senior currency analyst at Malayan Banking BHD.
Overseas investors sold US$550 million more shares than they bought in Taiwan, Indonesia, South Korea and Thailand this week, exchange data show.
“The market expects some bad data out of China and currencies of export-driven economies like Thailand will be affected,” Tanuwidjaja said.
The baht declined 0.5 percent to 31.71 per US dollar, paring a weekly advance to 0.6 percent.
Elsewhere, Indonesia’s rupiah gained 0.6 percent this week to 9,473 per US dollar, while India’s rupee climbed 0.2 percent to 55.475. The Vietnamese dong fell 0.7 percent to 21,000.