Asian currencies gained for a second week, approaching an almost 15-month high, as optimism that US lawmakers would resolve a budget deadlock supported demand for emerging-market assets.
US Senator Chuck Schumer said on Thursday there had been progress in talks to avert US$600 billion in spending cuts and tax increases as US President Barack Obama said this week he hoped for an agreement before Christmas.
The New Taiwan dollar edged up 0.2 percent to NT$29.116 against the greenback, its second weekly advance. Strong institutional buying in the local stock market boosted demand for the local currency, but its advance was tempered by the central bank’s continued intervention in an effort to boost the nation’s export competitiveness global competitive edge, dealers said.
India’s rupee had its best week since June after Moody’s Investors Service affirmed its stable rating outlook. It rallied 2.3 percent from a week ago to 54.2650 per US dollar in Mumbai, according to data compiled by Bloomberg.
Indonesia’s rupiah ended a six-week slump, gaining 0.6 percent to 9,594, and Malaysia’s ringgit strengthened 0.7 percent to 3.0380. South Korea’s won rose 0.3 percent to 1,082.85.
China’s yuan traded at a 19-year high, climbing 0.04 percent this week to 6.2267 per US dollar, according to China Foreign Exchange Trade System. It touched a 1993 high of 6.2223 on Tuesday and tested the upper limit of its trading band on each of the five days.
“There’s pent-up demand for the yuan,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. The currency is also supported by a trade surplus that has surpassed US$180 billion this year, he said.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding Japan, rose for a sixth month.
“The biggest driver is the US fiscal situation,” said Sean Yokota, the Singapore-based head of Asia strategy at Skandinaviska Enskilda Banken AB. “If you look at a one-month time horizon, we think they’ll reach a deal on the fiscal cliff, so Asian currencies will probably continue to appreciate.”
Global investors added US$827 million of new money into emerging-market bond funds in the week through Wednesday, EPFR Global data showed.
Foreigners were net buyers of stocks in Taiwan, India, the Philippines and Thailand this month.
Elsewhere, the Philippine peso appreciated 0.4 percent from a week ago to 40.895 per US dollar before a public holiday on Friday. Thailand’s baht was little changed at 30.69 per US dollar, as was Vietnam’s dong at 20,850.