Asian currencies rallied on Friday, paring this week’s losses, after Greece scrapped plans for a referendum that put its bailout in jeopardy, fueling investor appetite for emerging-market assets.
South Korea’s won led the advance, rising 1.7 percent to 1,110.70 against the US dollar, after the European Central Bank (ECB) cut borrowing costs, boosting demand for higher-yielding securities. Interest rates in the region are as high as 8.5 percent in India and 6.5 percent in Indonesia, compared with the ECB’s 1.25 percent and as low as zero in the US.
The New Taiwan dollar rose 0.7 percent to NT$30.025 per US dollar on Friday, paring its five-day drop to 0.5 percent. Right after the foreign-exchange market opened on Friday, NT dollar buying by foreign banks and exporters turned strong, helping the local currency partly recoup losses seen in the previous few sessions, dealers said.
A strong equity rebound added downward pressure on the US dollar as foreign institutional investors resumed buying to pick up large-cap stocks, in particular financial heavyweights, they said.
Thailand’s baht rose 0.4 percent to 30.66 per US dollar and slid 0.4 percent from a week ago.
The MSCI Asia-Pacific Index of regional equities rallied 2.4 percent, halting a four-day decline. Funds investing in emerging-market stocks attracted US$3.5 billion in inflows in the week ended Wednesday, the biggest amount since early April, Citigroup analyst Markus Rosgen said in a report on Friday, citing figures compiled by EPFR Global.
Benchmark 10-year government bonds in South Korea, Indonesia and the Philippines offer yields of 3.84 percent, 6.32 percent and 5.77 percent respectively, Bloomberg data show. US Treasuries yield 2.03 percent, while German bunds, seen as the European benchmark, are 1.82 percent.
The yuan advanced 0.19 percent on Friday to 6.3392 per US dollar in Shanghai, contributing to a weekly advance of 0.3 percent, according to the China Foreign Exchange Trade System. The People’s Bank of China raised its daily fixing by 0.05 percent to 6.3165, the highest level since July 2005.
The Philippine peso climbed 0.5 percent to 42.91 per US dollar and Indonesia’s rupiah rose 0.2 percent to 8,950 against the US dollar. The two currencies dropped 0.7 percent and 1.8 percent this week respectively. India’s rupee advanced 0.1 percent on Friday to 49.1113 per US dollar and fell 0.7 percent this week.
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