Asian currencies advanced this week, led by South Korea’s won, as signs the US economy is improving brightened the outlook for the region’s exports.
Stock indices rallied across Asia after US Department of Labor figures showed on Thursday unemployment claims in the world’s largest economy fell by 4,000 to 364,000 in the week ended Dec. 17, the lowest level since April 2008. Moody’s Investors Service said in a statement yesterday that the outlook for South Korea’s ratings remains stable amid geopolitical risks linked to the death of North Korean leader Kim Jong-il.
“Investment sentiment is improving after US data signaled the world’s largest economy is holding out well,” said Hwang Sun-min, a currency trader in Seoul at Kookmin Bank, South Korea’s largest lender. “Moody’s confirmation of sovereign ratings is helping push the won higher. Still, trading is dull as most players are already in holiday mode.”
The won strengthened 0.7 percent this week to 1,150.20 per US dollar as of 5:34pm in Seoul on Friday. Singapore’s dollar and Malaysia’s ringgit made slight gains against the greenback to S$1.2922 and 3.1558, respectively. The Philippine peso climbed 0.8 percent 43.480 and against the US currency.
Moody’s cited South Korea’s “economic strength, as well as high degree of institutional and government financial strengths” as reasons for keeping the nation’s credit ranking stable.
The Bank of Korea and South Korean Ministry of Strategy and Finance said on Friday in a joint statement after a meeting in Seoul that they would try to curb currency volatility and bolster financing for exporters so that they can cope with the global economic slowdown. Financial markets have restored stability after the death of Kim, according to the statement.
The New Taiwan dollar advanced 0.2 percent to NT$30.296 against the greenback this week. The NT dollar extended the week’s gains after President Ma Ying-jeou (馬英九) urged state-owned funds on Thursday to boost investment as the country strives to protect its economy from Europe’s debt crisis. The nation’s Financial Supervisory Commission said this week it would let Chinese banks buy stakes in local lenders and financial holding companies.
China’s yuan climbed for a second week after the People’s Bank of China reiterated it would push forward exchange-rate reform and interest-rate liberalization. The central bank set the yuan’s reference rate 0.07 stronger at 6.3209 on Friday, the highest level since Nov. 9.
The Chinese currency strengthened 0.19 percent this week to 6.3364 per US dollar.
Elsewhere, the Thai baht rose 0.1 percent to 31.29 and Indonesia’s rupiah dropped 0.7 percent to 9,100 against the US dollar. India’s rupee was little changed at 52.765.
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
ELECTRONICS: Strong growth in cloud services and smart consumer electronics offset computing declines, helping the company to maintain sales momentum, Hon Hai said Hon Hai Precision Industry Co (鴻海精密) on Saturday announced that its sales for last month rose 10 percent year-on-year, driven by strong growth in cloud and networking products amid the ongoing artificial intelligence (AI) boom. The company, also known internationally as Foxconn Technology Group (富士康科技集團), reported consolidated sales of NT$540.24 billion (US$18.67 billion) for the month, the highest ever for the period, and a 10.09 percent increase from a year earlier, although it was down 12.26 percent from the previous month. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said its cloud
RSS