Sun, Apr 13, 2014 page15

• Inflows, Fed drive Asian currencies’ third weekly rise

  FOREIGN FUNDING: As the US dollar plunged, overseas investors poured nearly US$2bn into Taiwan, Indonesia and South Korea, driving the NT dollar and won higher

  • Bloomberg
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  Led by South Korea’s won, Asian currencies completed a third weekly gain this week, as global funds increased holdings of the region’s assets amid easing concern about the timing of US interest rate increases.

  According to minutes of a meeting last month released this week, several US Federal Reserve policymakers said that a rise in their median projection for the main interest rate exaggerated the likely speed of tightening.

  Foreign funds bought US$1.9 billion more Taiwanese, Indian and South Korean stocks than they sold this week, official data show.

  Overseas investors bought US$716 million more Taiwanese stocks than they sold this week, exchange data show, after students protesting the trade in services deal with China ended a 24-day occupation of the legislature on Thursday.

  Global funds have bought US$4.52 billion more local shares than they sold so far this year.

  The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 major currencies excluding the yen, climbed 0.3 percent this week to 115.78 in Hong Kong.

  “The weaker US dollar has boosted Asian currencies,” said Eddie Cheung, a Hong Kong-based strategist at Standard Chartered PLC. “Equity flows into Taiwan have been consistently large and while offshore investors weren’t that deterred by the protests, the fact that they ended confirmed investors’ optimism that there would be a resolution.”

  In Taipei, the New Taiwan dollar had its biggest weekly advance in nine months this week, jumping 0.8 percent to NT$30.132 against its US counterpart compared with NT$30.380 on April 3, according to prices from Taipei Forex Inc.

  That is the steepest weekly rise since the period ended on July 13 last year.

  On Friday, the currency was little changed from Thursday, after slipping 0.2 percent in the last 14 minutes of trading amid suspected central bank intervention.

  In Indonesia, the rupiah had its biggest weekly drop of the year after unofficial results of a parliamentary vote showed Jakarta Governor Joko Widodo’s Indonesian Democratic Party — Struggle won less support than expected in legislative elections on Wednesday, falling short of the minimum percent of votes required to nominate him for president without forming a coalition.

  The rupiah depreciated 0.9 percent from a week ago, the most since the five days ended on Dec. 13 last year, to 11,414 US per dollar, according to prices from local banks.

  Elsewhere in Asia, the won jumped 1.8 percent to 1,035.35 per US dollar, Malaysia’s ringgit rose 1.4 percent to 3.2362 and the Philippine peso gained 1.5 percent to 44.29, data compiled by Bloomberg show.

  The won touched its strongest level since August 2008 on Thursday as the Bank of Korea raised its yearly growth forecast to from 3.8 percent to 4.

  Data this week showed the nation’s unemployment rate fell to 3.5 percent last month from 3.9 percent the previous month, compared with the median estimate of 3.6 percent in a Bloomberg survey.

  Bank of Korea Governor Lee Ju-yeol on Thursday said the monetary authority will act to stabilize the market in case of herd behavior.

  In Malaysia, the ringgit hit a four-month high of 3.2150 per US dollar on Thursday as a government report showed industrial production rose 6.7 percent in February from a year earlier, the fastest pace since July last year and exceeding the median forecast of a 6.2 percent gain.

  In Bangkok, Thailand’s baht advanced 0.6 percent this week to 32.291 against the greenback, while China’s yuan was little changed at 6.2123 and India’s rupee declined 0.3 percent to 60.2375.

  With the release of the Fed minutes dampening speculation that policymakers will accelerate interest rate increases, the greenback fell the most in more than six months this week, while the Swiss franc and the yen climbed against major counterparts as selloffs in stocks boosted haven demand.

  The Bloomberg Dollar Spot Index sank this week after the minutes played down Fed rate forecasts and a report last week showed slower-than-expected growth in US non-farm jobs.

  The index, which tracks the greenback against 10 major counterparts, fell 1 percent to 1,006.46, the biggest drop since the five days ended on Sept. 20 last year. The gauge touched 1,004.01 on Thursday, the lowest level since Oct. 30 last year.

  The US currency weakened 1.3 percent to US$1.3885 per euro, also the biggest drop since Sept. 20 last year, and slumped 1.6 percent to ￥101.62, while the euro declined 0.3 percent to ￥141.13.

  “The yen is still strongly correlated negatively with US stocks,” Toronto-Dominion Bank chief currency strategist Shaun Osborne said by telephone on Thursday.

  In London, the pound rose the most in two months versus the greenback this week as manufacturing and production data signaled the UK recovery is on track, boosting bets that the Bank of England will raise interest rates.

  Aside from the effects of the Fed minutes, sterling also rallied as the IMF raised its forecasts for Britain’s growth, predicting it will have the fastest expansion among developed nations.

  The pound gained 1 percent this week to US$1.6732, the biggest advance since the period ending on Feb. 14, but weakened 0.5 percent to ￡0.8306 per euro.
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