Asian currencies had their biggest weekly advance since April, led by the South Korean won and the Malaysian ringgit, as regional central banks raised interest rates and concern eased that Greece would default.
Taiwan raised borrowing costs on Thursday following increases last month in India and South Korea, boosting the yield advantage for the region’s debt. Foreign investors were net buyers of more than US$1.6 billion in stocks in India, Indonesia, South Korea, Taiwan, Thailand and the Philippines this week.
Lawmakers in Greece backed a bill to authorize an austerity plan required to keep rescue aid flowing.
The vote in Greece “has allowed investors to think beyond the euro-region and realize that growth prospects in Asia are stronger than rest of the world,” said Mirza Baig, a Singapore-based currency strategist at Deutsche Bank AG.
“The regional central banks are raising interest rates and that shows the confidence of policymakers in their economies. We have seen inflows into equities,” Baig said.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, rose 0.56 percent, the most since the week ended April 1. The won rose 1.2 percent this week to 1,069 per US dollar, according to data compiled by Bloomberg. The ringgit strengthened 1.2 percent to 3.01, the Indian rupee added 0.9 percent to 44.59 and the New Taiwan dollar advanced 0.4 percent to NT$28.788.
Taiwan’s central bank raised the discount rate on 10-day loans to banks to 1.875 percent from 1.75 percent.
The won advanced for a second week after a government report on Friday showed inflation accelerated. Consumer prices rose 4.4 percent, after a 4.1 percent gain in May, exceeding the central bank’s target for a sixth straight month. Exports increased 14.5 percent last month from a year earlier, resulting in a trade surplus of US$3.3 billion.
“The rise in consumer prices is reinforcing market sentiment that authorities may allow the won to appreciate in order to alleviate price pressure,” said Byeon Ji Young, a currency analyst at Woori Futures Co in Seoul.
The ringgit completed the first weekly gain in a month after global funds added to holdings of the nation’s assets. Foreign investors raised ownership of ringgit-denominated debt by 93 percent in May from a year earlier to 181.5 billion ringgit, Bank Negara Malaysia data released on Friday showed.
“The market is reacting to the positive headlines even though Greece by no means is out of the woods yet,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank.
Elsewhere, Indonesia’s rupiah gained 0.7 percent to 8,538 against the US dollar, the Singaporean dollar appreciated 0.8 percent to S$1.2268 and the Philippine peso climbed 0.8 percent to 43.125. The Thai baht weakened 0.4 percent to 30.80 before elections today which may trigger political unrest.
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