India’s rupee led the biggest monthly gain in Asian currencies since October on optimism the new administration would implement reforms to spur growth in the region’s third-largest economy. The Thai baht slumped.
The rupee rose to a one-year high last month as global funds added to holdings of the nation’s assets after the Bharatiya Janata Party won with the biggest majority in 30 years.
The baht headed for its worst month this year after a military coup left the country without an elected prime minister. Overseas investors bought US$3.2 billion more bonds than they sold in India and South Korea last month, while they sold US$1 billion of Thai debt, the latest exchange data show.
Photo: EPA
CAPITAL INFLOWS
“Asian currencies have been largely supported by renewed capital inflows,” said Callum Henderson, global head of foreign-exchange research at Standard Chartered PLC in Singapore. “The Indian rupee is the ongoing story of the election win and the prospects for reform.”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed 0.4 percent last month to 115.79 and touched the highest level in five months on May 21.
The Bloomberg Emerging Market Local Sovereign Index gained 2.5 percent in its best monthly performance since September.
In Taiwan, the US dollar fell against the local currency on Friday, slipping NT$0.078 to close at NT$30.050, as foreign fund inflows continued, dealers said.
Seasonal fund demand from local exporters to make month-end payments on the last business day of May and the slow pace of the Chinese yuan’s depreciation also weighed on the greenback, they said.
However, intervention by Taiwan’s central bank late helped the greenback, which dipped to a day low of NT$29.965, recoup most of its earlier losses at the close, dealers said.
The Taiwanese government recently raised its forecast for economic growth for this year to 2.98 percent from an earlier estimate of 2.82 percent and reported that export orders grew 8.9 percent in April from a year earlier, the third consecutive month orders posted growth.
The rupee appreciated 2.1 percent for the month to 59.1025 per US dollar, according to data compiled by Bloomberg. The Philippine peso strengthened 2 percent to 43.750, Malaysia’s ringgit climbed 1.6 percent to 3.2130 and South Korea’s won rose 1.3 percent to 1,020.20.
Indonesia’s rupiah declined for a second month amid approaching national elections scheduled for next month. The currency fell 1 percent to 11,675 per US dollar for the month, according to data compiled by Bloomberg. Elsewhere in Asia, China’s yuan strengthened 0.2 percent to 6.2473, while the Vietnamese dong retreated 0.3 percent to 21,158.
WEAK EURO
The euro fell the most since January on speculation the European Central Bank (ECB) would add stimulus next week to ward off deflation and bolster economic growth.
The 18-nation currency reached a more than three-month low as ECB President Mario Draghi said earlier last month that the euro’s strength was cause for “serious concern.”
The yen advanced versus the US dollar for a second month as a government report showed inflation accelerated to the fastest in more than two decades in April, reducing the prospect of additional stimulus by the Bank of Japan.
The ECB is forecast to cut its deposit and main refinancing rates when it meets on Thursday.
“It’s had something of a depressing effect globally to a degree and is consistent obviously with the euro looking a little weaker,” Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank AG in New York, said of the ECB’s upcoming meeting and government-bond yields. “The issue is trying to discern what’s priced in. That’s not easily done because, when you get to unorthodox policies, it’s less obvious.”
The euro fell 1.7 percent this month to US$1.3635 in New York and reached US$1.3586 on Thursday, the lowest level since Feb. 13. The currency dropped 2.1 percent to ￥138.74, the most since January. The yen added 0.5 percent to ￥101.77 per US dollar.
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