Asian Currencies Advance on Speculation of More Chinese Stimulus

Asian currencies gained on speculation China’s faltering economy will prompt policy makers to unveil more measures to shore up growth, buoying appetite for riskier assets.
Malaysia’s ringgit and South Korea’s won advanced for a second day after Premier Wen Jiabao said the momentum for a recovery in China isn’t yet in place and the government needs to assess and recognize the problems, Xinhua News Agency reported yesterday. Asian stocks rose before Federal Reserve Chairman Ben S. Bernanke presents his semi-annual report on the U.S. economic outlook to Congress this week.

 

July 16 (Bloomberg) -- Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ Ltd., talks about the outlook for the pound, dollar and yen. He spoke July 13 with Bloomberg's Niki O'Callaghan in London. (Source: Bloomberg)

“There is some speculation that a high level meeting among policy makers in China will lead to additional supportive measures,” said Sacha Tihanyi, a senior currency strategist at Scotiabank in Hong Kong, a unit of the Bank of Nova Scotia.
The ringgit gained 0.4 percent to 3.1739 per dollar as of 4:24 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The won closed 0.3 percent stronger at 1,147, the Philippine peso rose 0.3 percent to 41.863 and India’s rupee advanced 0.1 percent to 55.0825.
China’s gross domestic product increased 7.6 percent in the second quarter from a year earlier, the slowest pace in more than three years, the government reported July 13. The nation needs to expand consumption and restructure the economy, Vice Premier Li Keqiang said during a tour in central Hubei province, Xinhua reported the next day.

‘Safeguard Growth’

The world’s second-largest economy, including Hong Kong, is the biggest export market for countries such as South Korea, Taiwan and Malaysia. The MSCI Asia Pacific Index (MXAP) of stocks climbed 0.3 percent, following a 1.7 percent rally in the S&P 500 Index of U.S. equities on July 13.
“The won will be supported by U.S. stock gains and expectations for China’s stimulus, but the impact will be limited with global slowdown concerns lingering,” said Cho Young Bok, a Seoul-based currency dealer at Daegu Bank.
Thailand’s baht earlier touched a one-week high of 31.58 per dollar before trading 0.1 percent higher at 31.62. Overseas funds bought $65 million more Thai equities than they sold last week, taking net purchases this month to $118 million, exchange data show.
China’s yuan traded little changed at 6.3787 against the greenback in Shanghai, halting a three-day slide, according to the China Foreign Exchange Trade System. The central bank set its daily fixing rate at 6.3208 versus 6.3247 on July 13.

India Inflation

“China has to act as quickly as possible to safeguard growth,” said Banny Lam, Hong Kong-based chief economist at CCB International Securities Ltd., a unit of China’s second-largest bank. “The hopes of more stimulus measures are supporting the yuan today.”
India’s rupee strengthened for a second day to the highest level since July 4. A government report showed inflation slowed to 7.25 percent in June from a year earlier, versus 7.55 percent in May. Economists predicted a 7.61 percent gain in a Bloomberg News survey.
“The unexpected slowdown of inflation is fantastic news,” Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong, wrote in an e-mail today. “Despite the still elevated level, it opens the door for a rate cut already in July. The rupee should extend gains on hopes that monetary easing will boost growth, and on inflows into the bond market by foreign investors.”
Elsewhere, Indonesia’s rupiah dropped 0.4 percent to 9,484 per dollar, Taiwan’s dollar was steady at NT$30.01 and the Vietnamese dong was little changed at 20,863.

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