Asian currencies gained this week for the first time since April on optimism stimulus measures in the world’s largest economies will support regional exports.
Policymakers in China cut their deposit rate by 25 basis points to 3.25 percent, while South Korea kept the seven-day repurchase rate unchanged at 3.25 percent on Friday. Philippine President Benigno Aquino III said he expects better growth in the coming quarters, after the Philippine economy expanded at the fastest pace since 2010 last quarter. Asian currencies pared their weekly advance after US Federal Reserve Chairman Ben Bernanke said fresh monetary stimulus would need further assessment.
“China has the scope to take more measures to cushion the economic slowdown,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd (新加坡銀行). “The outlook for Asian economies is still cloudy because the global situation, especially in Europe, is still one of muddling along.”
The New Taiwan dollar slipped 0.2 percent on the week to close at NT$29.976.
Malaysia’s ringgit led with a 0.8 percent weekly advance to 3.185 versus its US counterpart. The peso gained 0.3 percent to 43.27 and South Korea’s won rose 0.2 percent to 1,175.3. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, climbed 0.2 percent to 114.16 this week. The gauge declined in each of the past five weeks, the longest losing streak since 2008.
The MSCI Asia Pacific Index of regional shares dropped 1.3 percent on Friday, halting a three-day advance and trimming its gain for the week to 0.1 percent, after Bernanke told US lawmakers the central bank would assess economic conditions before deciding if a third round of so-called quantitative easing is needed.
“There are still jitters on the global front and at best the US wants to keep the QE3 possibility vague for now,” said Enrico Tanuwidjaja, a Singapore-based senior currency analyst at Malayan Banking BHD.
Overseas investors sold US$550 million more shares than they bought in Taiwan, Indonesia, South Korea and Thailand this week, exchange data show.
“The market expects some bad data out of China and currencies of export-driven economies like Thailand will be affected,” Tanuwidjaja said.
The baht declined 0.5 percent to 31.71 per US dollar, paring a weekly advance to 0.6 percent.
Elsewhere, Indonesia’s rupiah gained 0.6 percent this week to 9,473 per US dollar, while India’s rupee climbed 0.2 percent to 55.475. The Vietnamese dong fell 0.7 percent to 21,000.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) quarterly sales topped estimates, reinforcing investor hopes that the torrid pace of artificial intelligence (AI) hardware spending would extend into this year. The go-to chipmaker for Nvidia Corp and Apple Inc reported a 39 percent rise in December-quarter revenue to NT$868.5 billion (US$26.35 billion), based on calculations from monthly disclosures. That compared with an average estimate of NT$854.7 billion. The strong showing from Taiwan’s largest company bolsters expectations that big tech companies from Alphabet Inc to Microsoft Corp would continue to build and upgrade datacenters at a rapid clip to propel AI development. Growth accelerated for
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