Thailand’s baht and Malaysia’s ringgit led Asian currency gains to the best week since January on speculation that Japan’s monetary easing will increase the flow of funds into emerging market assets.
The baht strengthened beyond 29 per US dollar for the first time since 1997 and the ringgit appreciated for a fourth week, the longest run in 14 months.
South Korea’s won rose this week after touching an eight-month low on the risk of a nuclear test or missile launch by North Korea. The Bank of Japan on April 4 said it plans to buy ￥7.5 trillion (US$75 billion) of bonds a month in the biggest move since its easing started in 2001.
“I expect the Bank of Japan’s plan to double its monetary base will lead to a pickup in inflows to emerging Asia,” said Khoon Goh, a Singapore-based senior strategist at Australia & New Zealand Banking Group Ltd.
The baht climbed 1.1 percent from a week ago, the most since January, to 29.01 per US dollar in Bangkok, data compiled by Bloomberg show. It touched 28.88 on Wednesday, the strongest level since the devaluation in July 1997 that sparked the Asian financial crisis. The ringgit rose 0.6 percent to 3.04 this week.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies, rose 0.2 percent in the five days through Friday, the biggest gain since January. The MSCI Asia Pacific Index of shares rose 3.3 percent.
The New Taiwan dollar weakened 0.2 percent to close the week at NT$29.995. The US dollar rose NT$0.015 against the local currency on Friday after the central bank propped up the greenback to help it reverse earlier losses, dealers said.
The central bank’s presence indicated its reluctance to see the NT dollar fall behind in a regional currency war triggered by the Bank of Japan’s move to further depress the yen, they said.
The won was little changed on Friday and gained 0.2 percent this week to 1,129.40 per US dollar in Seoul, data compiled by Bloomberg show. It touched 1,144.82 on Tuesday, the lowest since July last year.
China’s yuan reached the highest level this week since the country unified official and market exchange rates at the end of 1993. Yuan positions at local financial institutions stemming from foreign exchange transactions, a gauge of cross-border capital flows, climbed 295 billion yuan (US$47 billion) in February, the People’s Bank of China said on Wednesday.
GDP probably increased 8.1 percent in the period between January and last month, according to the median estimate of economists ahead of data due tomorrow in Beijing.
The yuan rose for a seventh week, the longest winning streak since November last year, climbing 0.2 percent to 6.1922 per US dollar in Shanghai, China Foreign Exchange Trade System prices show.
Malaysia’s ringgit had a fourth weekly gain on speculation that the ruling National Front coalition will win a May 5 election and continue economic reforms.
Elsewhere in Southeast Asia, Indonesia’s rupiah rose 0.3 percent from a week earlier to 9,713, India’s rupee gained 0.5 percent to 54.5250 and Vietnam’s dong climbed 0.3 percent to 20,855, as the Philippine peso fell 0.3 percent to 41.265.
In Japan, the yen stopped just short of ￥100 to the US dollar, a level it has not reached in four years. The Japanese currency gained on Friday, paring a second weekly loss after four straight days below 30 on the 14-day relative-strength index versus the greenback, which some traders see as a sign that it had dropped too much, too quickly.
The yen weakened 0.8 percent to ￥98.37 to the US dollar this week in New York and reached ￥99.95 on Thursday, the highest since April 2009. It sank 1.8 percent to ￥129.02 per euro and touched ￥131.12, the loewest since January 2010. The 17-nation currency rallied 0.9 percent to US$1.3113 in a second weekly gain.
The yen will probably weaken to ￥101.25 to the US dollar if it breaches the ￥100 level, IG Markets Securities Ltd in Tokyo said.
Bank of Japan officials on April 4 said the central bank will increase its monthly bond purchases to ￥7.5 trillion (US$77 billion), exceeding the ￥5.2 trillion forecast in a Bloomberg survey. They set a two-year horizon for their goal of achieving 2 percent inflation.
The Dollar Index, which Intercontinental Exchange Inc uses to track the greenback against the currencies of six major US trade partners, declined 0.2 percent to 82.311 this week and touched 82.046, the lowest since March 7, as lower-than-forecast retail sales added to bets that the US Federal Reserve will maintain its stimulus measures.
The Australian and New Zealand dollars rose as investors sought higher-yielding assets.
New Zealand’s currency, the kiwi, was the biggest winner against the US dollar, gaining 1.9 percent to US$0.8589. The yen was the biggest loser.
The US Treasury said in a report on Friday it will press Japan to refrain from competitive devaluation and from targeting its exchange rate for competitive purposes.
Meanwhile, the pound strengthened for a second week against the US dollar as a report showed growth in British industrial production beat economists’ forecast in February.
The pound rose 0.2 percent in the week to US$1.5366 and depreciated 0.6 percent to ￡0.8519 per euro.