Indonesia’s rupiah this week led Asian currencies in their biggest advance in nearly two months, as signs of improvement in the world’s two largest economies spurred optimism that regional exports will pick up.
US companies added more jobs last month than economists estimated, while China’s manufacturing grew at its fastest pace this year, reports showed.
Also spurring currencies upward were data showing that South Korea’s exports rose 2.5 percent annually last month after declining 0.9 percent the previous month and Malaysia on Friday reporting its 11th straight shipments increase in May.
“People became less worried China’s economy is going to crash and that is a positive development,” said Tim Condon, head of Asian research at ING Groep NV. “Economic activity in China has firmed up and that helps emerging markets and we’re now seeing an ongoing recovery in the US”
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most active currencies, excluding the yen, rose 0.3 percent over the week, the biggest advance since the period ended pm May 9.
In Taipei, the New Taiwan dollar rose 0.1 percent this week, after falling NT$0.002 to close at NT$29.937 in Friday’s relatively quiet session, dealers said, citing thin turnover.
They said the low trading volume signaled caution among traders who were wondering how the US Federal Reserve will respond after the US on Thursday reported better-than-expected non-farm payroll data for last month, they said.
The central bank stepped in late on Friday to help the greenback recoup losses and keep the NT dollar from appreciating, they added.
The US dollar opened higher on a mild technical rebound, but fell into negative territory as traders followed the lead of the yuan, which rose 0.13 percent against the greenback at one point amid improving sentiment toward China’s economy.
The upbeat mood toward China and even the regional economy prompted traders to raise their holdings in regional currencies, including the NT dollar, dealers said.
In Jakarta, the rupiah gained 1 percent to 11,880 per US dollar this week, while the ringgit rose 0.9 percent to 3.1860 and India’s rupee added 0.6 percent to 59.7350, according to data compiled by Bloomberg.
The ringgit climbed to its highest level since November last year on bets that Malaysian policymakers will raise interest rates for the first time in three years. Data on Friday showed that exports increased 16.3 percent in May from a year earlier, exceeding the median estimate of 15.2 percent made in a Bloomberg survey of economists.
“The ringgit is firmer than other Asian currencies because of expectations of an interest rate hike,” said Wong Chee-seng, a currency strategist at AmBank Group.
The rupiah’s weekly gain was the biggest since the period ended on May 16, as Indonesia’s trade balance swung from a US$1.96 billion deficit in April to a US$70 million surplus in May, data showed on Tuesday.
The nation holds a presidential election next week and Jakarta Governor Joko Widodo, the candidate leading opinion polls, plans to allow foreigners to buy apartments in an effort to raise tax revenues, Setyo Maharso, a member of his campaign team, said on Thursday.
South Korea’s won had a weekly gain of 0.5 percent after reaching a six-year high of 1,008.37 per US dollar on Friday. Seoul and the Bank of Korea on Wednesday voiced concerns about herd behavior in the currency market, signaling that they may intervene to counter gains.
In Beijing, the yuan climbed 0.22 percent over the week to 6.2043 ahead of talk between Chinese and US officials set for Wednesday and Thursday next week.
Elsewhere in Asia, the Philippine peso rose 0.7 percent from a week ago to 43.47 per US dollar, while Thailand’s baht added 0.1 percent to 32.37 and Vietnam’s dong rose 0.2 percent to 21,290.
As Asian currencies rose, the greenback posted its biggest weekly gain in six as signs of an accelerating US recovery spurred speculation that the Fed will bring interest rate increases forward.
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 major peers, posted a 0.24 percent weekly increase after the jobs data was released.
The index’s gain was the biggest in a week since the period ending on May 23.
“This has been the US dollar’s week overall,” said David Watt, chief economist at HSBC Holdings PLC’s Canada unit, said by telephone on Friday.
The US currency touched ￥102.27 this week, as the euro fell 0.4 percent to 1.3593 per US dollar this week after the European Central Bank on Thursday kept its main refinancing rate at 0.15 percent after a cut last month, as predicted by all 54 analysts in a Bloomberg survey.
In London, the pound reached a 21-month high versus the euro as speculation that the Bank of England will tighten policy, in contrast to the European Central Bank, boosted the relative allure of the currency.
Sterling climbed to its highest since 2008 against the greenback, posting the longest run of weekly advances in more than one-and-a-half years, as reports showed that manufacturing and construction growth accelerated last month.
The pound rose 1.1 percent this week to ￡0.7924 per euro and gained 0.7 percent to US$1.7160.
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