Asian currencies had a third weekly gain, led by South Korea’s won, on optimism the US Federal Reserve would delay any reduction in stimulus after a budget impasse threatened the world’s largest economy.
The Bloomberg-JPMorgan Asia Dollar Index extended its advance from Oct. 11 to 0.4 percent after US President Barack Obama signed legislation this week that ended a 16-day partial government shutdown and deferred funding and debt ceiling deadlines into next year. The “fiscal shenanigans” undermined the case for tapering the Fed’s US$85 billion in monthly bond buying, Dallas Fed President Richard Fisher said on Thursday.
“The removal of the US default risk added to improving risk sentiment,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo.
Speculation the Fed “will not rush to reduce stimulus already gave some underlying support to emerging-market assets,” he said.
The won strengthened 1 percent in the past five trading sessions to 1,060.84 per US dollar in Seoul, according to prices compiled by Bloomberg.
Seoul is monitoring foreign-exchange inflows and currency movements to see whether there are speculative activities, South Korean Finance Ministry Director Kim Seong Wook said by telephone on Friday. The Bank of Korea will take steps to ensure market stability, including injecting liquidity and changing rules on capital flows, if needed, it said in a report to parliament on Friday.
The New Taiwan dollar advanced 0.15 percent to NT$29.446 this week amid an improved outlook for the regional economy, dealers said.
Traders showed greater willingness to hold onto regional currencies after China, the world’s second-largest economy, reported third quarter growth that was brisker than in the first two quarters of the year, they said.
Buying in Taiwanese equity market also added downward pressure on the US dollar before Taiwan’s central bank stepped in to prop up the currency, they added.
Global funds bought US$2.3 billion more South Korean, Taiwanese, Thai and Philippine stocks than they sold this week, exchange data show.
Thailand’s baht gained 0.8 percent to 31.06, Malaysia’s ringgit climbed 0.7 percent to 3.1561, while Indonesia’s rupiah rose 0.4 percent to 11,323. The yuan gained 0.39 percent to 6.0968, its best week in a year.
The yuan touched a 20-year high as data showed China’s economic expansion accelerated in the third quarter. The People’s Bank of China boosted the currency’s daily fixing by 0.1 percent to 6.1372 per US dollar on Friday, the strongest since a peg to the greenback ended in 2005. Chinese GDP rose 7.8 percent in the third quarter, from 7.5 percent in the previous quarter, official figures showed.
“China’s economic growth is strong and that translates into further yuan appreciation pressure,” said Daniel Chan, director at China Silver Global Investment Consultant in Hong Kong.
Elsewhere in Asia, the Philippine peso gained 0.2 percent to 43.073 against the US dollar. India’s rupee fell 0.3 percent to 61.265 and Vietnam’s dong was little changed at 21,115 from 21,100 last week.
The US dollar also slid to its weakest since February according to an index comparing it with 10 major currencies. The Bloomberg US Dollar Index slumped 1 percent this week in New York, the most since the five days ended Sept. 20, to 1,002.73. It dropped to as low as 1,000.70, the least since Feb. 13.
The US dollar fell 1 percent against the euro, also the biggest weekly decline since Sept. 20, to US$1.3687 and touched US$1.3704, the weakest since Feb. 1. The US dollar fell 0.9 percent to ￥97.72. The euro gained 0.2 percent to ￥133.79 in its second weekly advance.
The British pound rose the most in five weeks versus the US dollar, and strengthened for the first time in three weeks against the euro as data showed UK retail sales increased more than analysts forecast last month and jobless claims fell last month by the most in 16 years.
The pound rose 1.45 percent in the week to US$1.6188 as of 4:53pm in London on Friday, the biggest gain since the five-day period ended Sept. 13. Sterling gained 0.4 percent in the week to ￡0.8460 per euro.