Asian currencies gained this week as signs economic expansion is gathering momentum prompted central bankers in South Korea and Malaysia to increase borrowing costs, underpinning fund inflows into the region.
The won climbed to a two-week high after the Bank of Korea unexpectedly on Friday raised interest rates for the first time since August 2008, and said the economy will see “solid growth” in coming months. The ringgit strengthened for a second day after Bank Negara Malaysia on July 8 lifted its overnight rate for the third time this year.
“The knee-jerk reaction has been to buy up the won and we still like Asian currencies,” said Thio Chin Loo, a senior currency strategist at BNP Paribas SA in Singapore. “They’ve been upgrading growth forecasts and they did hint as well before this about inflation picking up.”
The won appreciated 2.8 percent to 1,195.85 per US dollar in Seoul from July 2, according to data compiled by Bloomberg. The ringgit strengthened 0.9 percent to 3.1965 and the Philippine peso rose 0.8 percent to 46.165.
Singapore’s dollar gained 1.1 percent to S$1.3781 against its US counterpart as analysts forecast the city-state’s economic growth accelerated in the second quarter, according to a Bloomberg survey. The government will report its preliminary estimate on Wednesday.
The New Taiwan dollar had a weekly gain after the nation’s exports rose for an eighth straight month, bolstering confidence the economic recovery remains on track.
The NT dollar advanced 0.2 percent to NT$32.125 against its US counterpart at the 4pm close on Friday, completing a weekly gain of 0.5 percent, according to Taipei Forex Inc. It touched NT$32.001, the strongest level since June 28.
Elsewhere, China’s yuan was little changed from July 2 at 6.7735 and the Indonesian rupiah edged up 0.2 percent to 9,043. Vietnam’s dong held at 19,085, halting the biggest slide in four months last week. India’s rupee strengthened 0.3 percent to 46.665.
The euro climbed to an eight-week high against the US dollar as European Central Bank President Jean-Claude Trichet said the economic recovery is gathering momentum.
The yen and US dollar dropped this week against most of their major counterparts as stocks rallied on evidence the world is weathering Europe’s sovereign-debt crisis, spurring demand for riskier assets. Canada’s currency rose the most in almost a month before the central bank’s policy meeting later this month as job creation was almost five times what economists forecast.
“Risk sentiment is still quite constructive as we got another week of equity market gains,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank in Toronto. “Trichet was quite upbeat in his comments this week, which gave the euro a little more support.”
The euro appreciated 0.6 percent to US$1.2641 on Friday, from US$1.2566 on July 2. It touched US$1.2722 on Friday, the highest level since May 12. The euro rallied 1.6 percent to ¥112.01, from ¥110.27. The US dollar advanced 1 percent to ¥88.62, from ¥87.75.
Sterling appreciated 0.2 percent to £0.8358 per euro, and was little changed at US$1.5174.
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