Asian currencies posted their best week against the US dollar this year on optimism stimulus spending plans will avoid a deeper global recession, reviving investor demand for emerging-market assets.
The New Taiwan dollar, South Korea’s won and India’s rupee rallied this week after central banks in the US, Japan and the UK announced plans to buy bonds, increasing the supply of US dollars, yen and pounds.
The MSCI Asia-Pacific Index of regional stocks completed its biggest weekly advance since August 2007 and the cost to protect Asian debt outside Japan declined.
“There’s optimism surrounding the stimulus measures; concerns about recession are easing,” said D. Sivadass, a currency forwards trader at EON Bank Bhd in Kuala Lumpur. “Regional currencies are mostly benefiting from the dollar-weakness trend.”
The NT dollar strengthened 2.1 percent this week to NT$33.800, while the rupee climbed as much as 2.9 percent to 50.03 before trimming gains.
The won gained 5 percent to 1,412.50 per dollar, according to Seoul Money Brokerage Services Ltd.
Malaysia’s ringgit rose 1.7 percent to 3.6445.
The four currencies and Singapore’s dollar logged their biggest weekly gains since the five days ended Dec. 19.
All of Asia’s 10 most-traded currencies appreciated as the ICE’s Dollar Index, which tracks the US dollar versus the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, fell to the lowest in more than two months on Thursday.
“The Fed’s move to buy bonds is going to keep US interest rates low on a sustained basis,” said Krishnamurthy Harihar, head of treasury at Development Credit Bank Ltd in Mumbai. “The rupee is gaining from the widening India-US rate differential, which has triggered broad dollar declines.”
Elsewhere, the Philippine peso advanced 0.5 percent from a week ago to 48.315 a dollar and Singapore’s dollar rose 1.8 percent to S$1.5132. Indonesia’s rupiah jumped 1.8 percent to 11,775 and China’s yuan gained 0.2 percent, the most in more than two months, to 6.8277.
The US dollar rebounded on Friday as markets weighed plans announced by the US Federal Reserve this week to buy up to US$300 billion in bonds.
In just two days following the announcement, the US dollar had fallen 5 percent versus the euro, 3 percent against the pound and 4 percent versus the yen.
But on Friday, the buck regained some steam. The 16-nation euro dropped to US$1.3551 in late New York trading from US$1.3662 on Thursday, while the pound fell to US$1.4439 from US$1.4511. The dollar climbed to ¥95.96 from ¥94.53.
In other late trading on Friday, the dollar rose to SF1.1296 from SF1.1248, and inched up to C$1.2395 from C$1.2382.
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