Sun, May 11, 2014 page15

• Ratings bump pushes peso up, regional peers follow

  • Bloomberg
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  Asian currencies had their biggest weekly gain since March this week after the Philippines won a surprise credit rating upgrade and Malaysia’s ringgit rallied on the prospect of an interest rate increase.

  The peso jumped by the most in four years on Friday after Standard & Poor’s on Thursday raised the Philippines’ debt rating to “BBB,” its second-lowest investment-grade ranking.

  Bank Negara Malaysia said it may adjust its monetary policy after it held borrowing costs on Friday.

  Also affecting markets this week were reports showing that Taiwan’s exports jumped last month, while China’s trade surplus widened.

  The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies excluding the yen, climbed 0.3 percent from May 2 to 115.73 on Friday.

  In Taipei, the New Taiwan dollar had its second weekly gain on speculation that export data that beat estimates will lure more inflows.

  The nation’s overseas shipments rose 6.2 percent last month, compared with a 2 percent increase in March and the median estimate in a Bloomberg survey of a 5.5 percent gain, official data showed on Wednesday. The economy in the first quarter grew at its fastest pace since the last three months of 2012.

  The NT dollar rose 0.1 percent this week to NT$30.175 against its US counterpart, according to prices from Taipei Forex Inc, as the currency was supported by the greenback heading for its second week of decline.

  “The US dollar has been weaker lately,” KGI Securities’ (凱基證券) Taipei-based economist Andrew Tsai (蔡耀德) said. “Taiwan’s economic data, such as exports, have also been better than expected, so there may be more fund inflows.”

  Elsewhere in Asia, the peso jumped 2 percent to 43.655 this week, while Malaysia’s ringgit rose 1.2 percent since May 2 to 3.2277 and South Korea’s won advanced 0.6 percent to 1,024.45.

  “Investors’ perception on selective Asian economies has improved,” said Frances Cheung, head of Asian rates strategy at Credit Agricole CIB. “And some central banks are getting increasingly hawkish. We like the peso, the won and [New] Taiwan dollar.”

  Bangko Sentral ng Pilipinas on Friday raised lenders’ reserve requirement for a second time this year, hiking it from 19 to 20 percent, while leaving its benchmark rate unchanged at 3.5 percent. According to the median estimate in a Bloomberg survey, the rate is to be raised to 4 percent by the end of the year.

  Gains in the won were capped after its advance to the strongest level since 2008 prompted Bank of Korea Director-General Ryoo Sang-dai to say on Wednesday that authorities are monitoring the situation and would move to stabilize the currency if necessary.

  The yuan had its biggest weekly gain since February 2012 after data on Thursday showed that overseas shipments rose 0.9 percent last month from a year earlier. That compared with the 3 percent drop predicted in a Bloomberg survey and the 6.6 percent decline seen in March. Last month’s trade excess was US$18.5 billion, compared with US$7.7 billion in March. The yuan rose 0.5 percent this week to 6.2280 per US dollar, China Foreign Exchange Trade System prices show.

  In Bangkok, the baht fell for a third week after Thai Prime Minister Yingluck Shinawatra was forced from office on Wednesday following a Thai Constitutional Court ruling that found her guilty of abusing power. The baht fell 0.6 percent since May 2 to 32.614 per US dollar, data compiled by Bloomberg show.

  Elsewhere in Asia, India’s rupee gained 0.3 percent this week to 59.975, Indonesia’s rupiah weakened 0.1 percent to 11,530 and Vietnam’s dong fell 0.1 percent to 21,103.

  In Europe, the euro had its biggest drop versus the greenback in seven weeks this week, as the European Central Bank (ECB) signaled it will ease next month, halting a rally that pushed the 18-nation currency to its strongest level since 2011.

  Emerging market currencies rose against the greenback as US Federal Reserve Chair Janet Yellen declined to provide a timeframe for raising interest rates, while ECB President Mario Draghi said policymakers would be “comfortable” with further stimulus next month.

  “This is the last time that Draghi can maintain credibility with verbal intervention and so it’s really time for them to deliver,” Credit Agricole SA macro strategist Mark McCormick said via telephone.

  The euro fell 0.8 percent this week to US$1.3758 in New York, the most since the five days ended on March 21. Europe’s common tender dropped 1.2 percent to ￥140.13, while the Japanese currency rose 0.3 percent to ￥101.86 per US dollar.

  In London, the pound rose for a second week versus the euro on speculation that the Bank of England is moving closer to raising interest rates and after the ECB’s signal that it may increase stimulus.

  Sterling gained 0.7 percent this week to ￡0.8167 per euro and fell 0.1 percent to US$1.6848.

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