Asian currencies strengthened for a third week after the European Central Bank (ECB) unveiled a bond-buying plan to stem the region’s debt crisis, spurring a rally in global stocks.
With ECB President Mario Draghi saying on Thursday that policymakers had agreed to an unlimited debt-purchase program, the New Taiwan dollar reached a two-month high on Friday and the Philippine peso completed its best week in almost three months.
“The ECB taking action leads to optimism about stability in the euro-area financial markets,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “That improved risk sentiment and encouraged fund inflows to riskier assets, supporting emerging currencies.”
The US dollar fell against the NT dollar on Friday, shedding NT$0.06 to close at NT$29.842, as the Taiwanese stock market staged a strong rebound and boosted demand for the local currency, dealers said.
However, the greenback’s retreat was capped by the central bank’s intervention to shore up the US currency in a bid to maintain Taiwan’s export competitiveness, they said. The NT dollar closed the week up 0.4 percent.
The peso rallied 1 percent this week to 41.67 per US dollar in Manila, according to Tullett Prebon PLC, the most since the five days ended June 15.
South Korea’s won rose 0.4 percent to 1,130.40, and Thailand’s baht gained 0.4 percent to 31.22.
The Bloomberg-JP Morgan Asia Dollar Index, which tracks the region’s currencies, rose 0.3 percent this week. The MSCI Asia Pacific Index of shares advanced 2.2 percent on Friday, while the S&P 500 index of US equities surged 2 percent on Thursday to the highest level since May 2008.
China’s yuan completed a sixth weekly gain on speculation the government would step up spending on roads and railways to make up for a dwindling contribution from exports. Overseas sales rose 1 percent in July from a year earlier, the least since January, official data show.
“China is likely to step up fiscal stimulus soon if exports fail to rebound strongly,” said Tommy Ong, a Hong Kong- based senior vice president of treasury and markets at DBS Bank (Hong Kong) Ltd.
The currency rose 0.09 percent this week to 6.343 per US dollar, according to the China Foreign Exchange Trading System.
Malaysia’s ringgit advanced 0.3 percent this week to 3.1070 per US dollar, while India’s rupee climbed 0.2 percent to 55.3950. Indonesia’s rupiah lost 0.1 percent to 9,588, the fourth straight weekly drop. Vietnam’s dong was little changed at 20,848.