The euro climbed the most versus the US dollar in six weeks as the European Central Bank (ECB) said it might raise interest rates next month, while US Federal Reserve officials signaled the US economy still needs stimulus.
The greenback fell versus most major peers on speculation a payrolls gain wasn’t enough to spur the Fed to raise rates soon. US Fed Chairman Ben Bernanke wouldn’t rule out more US Treasury buys to support growth.
“The takeaway from a very busy week is still a clear tightening signal from the ECB, relatively dovish comments from Bernanke and a US jobs report that’s positive, but not positive enough to alter US rate expectations,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co in New York. “There’s scope for some further near-term dollar weakness or euro strength.”
The euro climbed 1.7 percent to US$1.3987, the most since the five days ended Jan. 21, from US$1.3754 on Feb. 25. It added 2.5 percent to ￥115.13, from ￥112.35. The US dollar appreciated 0.8 percent to ￥82.32, from ￥81.68.
The euro gained versus 15 of its 16 most-traded counterparts on Thursday after ECB President Jean-Claude Trichet raised the prospect of raising interest rates to counter inflation.
The pound declined against the euro this week after comments by Bank of England (BOE) policymakers bolstered speculation the central bank will keep interest rates on hold until the UK economy shows more signs of recovery.
The pound depreciated 0.8 percent versus the euro to ￡0.8803 as of 6pm on Friday, when it reached ￡0.8607 per euro, the weakest intraday level since Jan. 31. It also depreciated 0.8 percent against the greenback to US$1.6249.
ASIAN CURRENCIES
Asian currencies rose this week, led by South Korea’s won and the Philippine peso, on speculation central banks will tolerate appreciation and raise borrowing costs to tame inflation.
The Bloomberg-JPMorgan Asia Dollar Index climbed 0.5 percent this week as Central Bank of the Philippines Governor Amando Tetangco said on Tuesday there was less scope to keep borrowing costs unchanged as prices rise.
The won advanced 1.1 percent this week to 1,114.60 per US dollar in Seoul, according to data compiled by Bloomberg, while the peso climbed 1 percent to 43.268.
The New Taiwan dollar rose 1 percent to NT$29.462 this week.
The NT dollar halted a three-week losing streak after data from the US signaled growth in the world’s largest economy is gathering pace, brightening the outlook for regional exports.
“The recovery outlook for the US is pretty good and it’s supporting [the NT] dollar and other regional currencies,” said Henry Lin, a Taipei-based foreign-exchange trader at Shin Kong Commercial Bank (新光銀行).
The peso rose this week on speculation the central bank will raise its benchmark policy rate after inflation accelerated last month at the fastest pace in nine months.
Consumer prices increased 4.3 percent from a year earlier, after a revised 3.6 percent gain in January, the National Statistics Office said in Manila on Friday.
“I’m amazed at the resilience of these Asian currencies,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “While it doesn’t look like the turmoil in the Middle East will abate soon, the markets seem to have concluded at least for now that it won’t be that big an impact.”
Elsewhere, the yuan strengthened 0.1 percent this week to 6.5686 per US dollar. The Singapore dollar appreciated 0.5 percent to S$1.2674, Thailand’s baht rose 0.5 percent to 30.49, Malaysia’s ringgit strengthened 0.7 percent to 3.0275 and Indonesia’s rupiah gained 0.6 percent to 8,787.
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