The New Taiwan dollar, Malaysian ringgit and Singapore dollar rose this week as accelerating inflation spurred speculation central banks will allow faster appreciation to rein in price increases. The South Korean won fell.
The ringgit and Singapore currency surged to the strongest in more than a decade, and the NT dollar was near the highest in three years. Stronger currencies may lower inflation by cutting the prices of imported goods, whilst interest-rate increases risk slowing the economy.
"I don't think you're going to see rate hikes across the rest of Asia," said David Fernandez, head of emerging markets research at JPMorgan & Chase Co in Singapore.
Instead, there will be "foreign-exchange appreciation," Fernandez said.
The New Taiwan dollar gained 0.7 percent this week to NT$30.750 against the US dollar at the close of onshore trading on Friday, Taipei Forex Inc said. It was the eighth weekly advance as foreign investors bought stocks on speculation the economy will improve after the presidential elections this month.
"Funds are flowing in," said Jerry Ho, a currency trader at Cathay United Bank (
The NT dollar has risen 5.4 percent this year, the best performing currency among the 10 most-traded in Asia. The nation's two presidential candidates both support closer ties with China, Taiwan's biggest trading partner.
The Singapore dollar rose 0.6 percent against the dollar in the week to S$1.3858 as of 6.01pm local time. It was little changed on Friday after rising to a 13-year high of S$1.3849.
Inflation in the city, which is at the highest in almost 26 years, will average 5.3 percent this year after climbing 2.1 percent last year, Fitch Ratings said.
"The massive inflation pressure will likely keep the Monetary Authority of Singapore appreciating the Singapore dollar," wrote Morgan Stanley currency analysts, led by London-based Stephen Jen, in a research report dated on Thursday.
The US bank says the currency may rise to S$1.35 by mid-year and S$1.29 by year-end.
South Korea's won fell 1.9 percent this week to 957.50 against the US dollar as of the 3pm close in Seoul, Seoul Money Brokerage Services Ltd said.
It was the biggest decline since the week ended Aug. 17 last year as stocks fell 2 percent amid concern the deepening turmoil in global credit markets will spur funds to sell local assets.
"Investors are unnerved by the ongoing global credit woes," said Kim Yule, a currency trader at BNP Paribas SA in Seoul. "They do not feel like increasing holdings of emerging market assets in times of turbulence."
The Philippine peso lost 1 percent against the greenback this week to 40.845 on concern losses in global credit markets will escalate after the US Mortgage Bankers Association said on Thursday that home-loan foreclosures rose to an all-time high at the end of last year.
"More and more bad news is coming out from the US and investors are uneasy," said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp in Manila.
Funds may sell Philippine stocks and bonds as they prefer to remain liquid, he said.
The Thai baht was little changed a week after the Bank of Thailand removed its foreign exchange controls. The currency traded at 31.56 on Friday against the US dollar, compared with 31.58 in late trading on Feb. 29.
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