South Korea’s won led gains in Asian currencies this week as data signaled China’s economy is improving, brightening the outlook for the region’s exports.
A manufacturing slump is easing in the world’s second-largest economy, a private survey indicated on Wednesday, and reports earlier in the month showed growth in exports and investment gathered pace last month. The US Federal Reserve said this week it will maintain its bond purchase program, a policy that boosts the supply of US dollars that can be invested in emerging-market assets. All but one of 27 economists surveyed by Bloomberg News expect the Bank of Japan to add to stimulus for the second time in two months next week.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, climbed 0.2 percent this week, the most since the five-day period ended on Oct. 12, to 117.70.
The New Taiwan dollar completed its first weekly decline in three on speculation that the Taiwan Central Bank sold the currency as it approached a five-month high.
Gains may be tempered as policymakers attempt to slow appreciation that could hurt exports, Scotiabank strategist Sacha Tihanyi said.
The Taiwan dollar fell 0.1 percent this week to NT$29.30 versus the greenback in Taipei, compared with NT$29.286 a week ago, Taiwan Stock Exchange data showed. The currency touched NT$29.20 this week and NT$29.142 on Oct. 17, the strongest level since May 2.
“The Taiwan dollar has strengthened significantly since the beginning of September and portfolio inflows have definitely played a significant part,” Hong Kong-based Tihanyi said.
Taiwan’s central bank has intervened to stem advances in the currency in the final minutes of trading on most days in the past five months, according to traders who asked not to be identified.
Meanwhile, the won rose 0.6 percent to 1,097.03 per US dollar, according to data compiled by Bloomberg. China’s yuan gained 0.08 percent to 6.2489 and touched a 19-year high of 6.2380 on Friday.
Financial markets in Singapore, Malaysia, the Philippines and Indonesia closed for a holiday on Friday. In India, bond and currency markets are shut while equities were traded.
The won advanced to a 13-month high as speculation Japan’s central bank will loosen monetary policy spurred demand for riskier assets. The yen declined 0.8 percent this week versus the US dollar.
“With the dollar-yen exchange rate rising, some investors are entering cross trades of selling the yen and buying the won,” Seoul-based Woori Futures Inc currency analyst Byeon Ji Young said.
Elsewhere, the Thai baht fell 0.1 percent to 30.75 per US dollar. The Philippine peso rose 0.4 percent this week to 41.208 through Thursday, while India’s rupee advanced 0.5 percent to 53.575 and Indonesia’s rupiah declined 0.1 percent to 9,605 in the same period. Malaysia’s ringgit added 0.35 percent to 3.0430 in the first four days of the week.
New Zealand’s dollar, nicknamed the kiwi, was the biggest winner among its 16 most-traded peers, climbing 0.9 percent to US$0.8229.
The euro fell versus the US dollar this week, paring a third monthly gain, as reports showed Spanish unemployment climbed to a record and German business confidence unexpectedly fell amid Europe’s three-year-old debt crisis.
The yen declined versus the greenback for a second week on speculation the Bank of Japan will expand monetary stimulus at a policy meeting on Tuesday.
Europe’s 17-nation currency dropped versus most major peers as data showed services and manufacturing in the euro region this month contracted more than economists predicted. The US unemployment rate rose last month, a US Department of Labor report next week may show.
“The data was not terribly supportive of the euro this week,” Charles St-Arnaud, a New York-based economist and foreign-exchange strategist at Nomura Holdings Inc, said on Friday in a telephone interview.
The euro dropped 0.7 percent to US$1.2938 this week in New York, trimming its gain for this month to 0.6 percent, which would be the least since March. The single currency weakened 0.2 percent to ￥103.05, paring a monthly gain to 2.8 percent. Japan’s currency fell 0.4 percent to ￥79.65 per US dollar, losing for two consecutive weeks for the first time since March.
The Dollar Index, which measures the currency against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, increased 0.5 percent to 80 and touched 80.27, the highest level since Sept. 11.