Asian currencies had their biggest monthly advance since December, led by Singapore’s dollar and South Korea’s won, on speculation regional central banks will boost borrowing costs to tame inflation.
The Bloomberg-JPMorgan Asia Dollar Index touched its highest level since August 1997 on Friday as the world’s fastest economic growth and interest-rate increases helped attract funds from abroad. India, China, South Korea, Taiwan, Thailand, Indonesia and Philippines have raised rates this year.
Taiwan’s dollar rallied 2.3 percent this month to NT$28.762 against the greenback, posting its second weekly advance as overseas investors bought US$1.2 billion more local shares than they sold last week, according to exchange data.
US Federal Reserve Chairman Ben Bernanke retained a pledge this week to keep interest rates “exceptionally low” for an “extended period.”
“Foreign inflows were the main factor driving the appreciation this week, especially after -Bernanke made the comments,” said Tarsicio Tong (湯健揚), a Taipei-based currency trader at the Union Bank of Taiwan (聯邦銀行).
To prevent the Taiwan dollar from appreciating too rapidly, the country’s central bank continued its recent pattern of intervening in the market in late trading to boost the value of the US dollar, dealers said.
They said the Taiwan dollar is expected to test the NT$28.5 level in the short term if foreign investors move more funds into the region, but expected the central bank to try hard to fend off the upward pressure to protect Taiwan’s exporters.
According to China Foreign Exchange Trade System, the yuan rose 0.16 percent to 6.4912 per US dollar on Friday. It touched 6.4892, the strongest level since the country unified official and market exchange rates at the end of 1993, after the Federal Reserve signaled plans to maintain its record monetary stimulus earlier this week.
The yuan rallied 0.24 percent this week and 0.88 percent this month.
Singapore’s dollar climbed 2.9 percent this month to S$1.2252 against its US counterpart, according to data compiled by -Bloomberg. South Korea’s won advanced 2.4 percent to 1,071.53. The Asia Dollar Index gained 1.5 percent this month.
The US dollar fell the most in seven months versus the currencies of major US trading partners as economic growth slowed and US Federal Reserve Chairman Ben Bernanke said he was unsure when monetary stimulus will end.
The Swiss franc rallied in April against most of its major counterparts and rose to a record versus the greenback as Swiss National Bank President Philipp Hildebrand said expansionist monetary policy risks stoking inflation. The Australian dollar and Norwegian krone surged as commodities gained. The US dollar fell to a 16-month low versus the euro before next week’s payrolls report, forecast to show job growth slowed.
The US dollar recovered slightly against the euro late on Friday.
IntercontinentalExchange Inc’s Dollar Index, which tracks the greenback against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, fell 3.9 percent to 72.026 on Friday, from 75.857 on March 31. It was the biggest monthly drop since a decrease of 5.4 percent in September. The gauge slid to 72.834 on Friday, the lowest level since July 2008.
The yen dropped for a fourth month versus the euro, sliding 2 percent to ￥120.18 as Bank of Japan Governor Masaaki Shirakawa signaled in an interview with NHK Television that the central bank may expand a lending program aimed at bolstering growth industries after the record earthquake on March 11.
The euro surged 4.7 percent to US$1.4829, from US$1.4158, after touching US$1.4882 on Thursday, the highest level since December 2009. The US dollar dropped 2.5 percent to ￥81.08.
The pound declined to the weakest level in six months against the euro as UK consumer confidence and factory orders deteriorated, indicating the British economic recovery is struggling.
The pound slipped against the 17-member common currency for the first week in three after a report by GfK NOP Ltd showed consumer sentiment slumped to its weakest level since the depth of the recession in February 2009. Short-sterling futures rose for a fourth week as traders speculated the Bank of England will keep its benchmark rate at a record low to support the economy.
The pound declined 0.6 percent in the week to ￡0.8874 per euro as of 5:05pm in London on Friday. It earlier slipped to ￡89.37 per euro, the weakest level since Oct. 25. Against the US dollar, sterling gained 1.2 percent to US$1.6701 as the greenback slumped against the majority of its peers.
Elsewhere, Malaysia’s ringgit advanced 2.2 percent last month to 2.9615 per US dollar, according to data compiled by Bloomberg. Indonesia’s rupiah gained 1.6 percent to 8,566, the Philippine peso climbed 1.4 percent to 42.803 and Thailand’s baht rallied 1.3 percent 29.88. India’s rupee rose 0.8 percent to 44.215.
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