India’s rupee and South Korea’s won led gains in Asian currencies this week as foreign funds increased holdings of emerging-market assets amid speculation global central banks will ease monetary policy to spur growth.
China’s exports increased 1 percent in July, less than the median estimate of economists in a Bloomberg survey for an 8 percent gain and June’s 11.3 percent pace, official data showed yesterday. Inflation in the world’s second-largest economy was 1.8 percent last month, the least since January 2010, according to an Aug. 9 report. Germany backed European Central Bank President Mario Draghi’s bond-buying plan this week to tackle the region’s debt crisis.
“Asian currencies continue to gain ground against the dollar, pricing in a higher probability that the Federal Reserve and ECB will satisfy expectations for further significant monetary easing,” Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia (BNS), said yesterday. “Slower inflation definitely does add to speculation of easing in China.”
The rupee strengthened 0.8 percent this week to 55.2850 per dollar in Mumbai, according to data compiled by Bloomberg. South Korea’s won rose 0.4 percent to 1,130.45, Malaysia’s ringgit advanced 0.2 percent to 3.1194, and the Thai baht gained 0.3 percent to 31.48. China’s yuan appreciated 0.2 percent to 6.3600.
The Bloomberg-JPMorgan Asia Dollar Index touched 115.73 on Aug. 9, the highest level since May 15, and was little changed from a week earlier. Global funds pumped more than $4 billion into stocks in South Korea, Taiwan, Thailand and Indonesia in the first four days of this week, exchange data show.
Bond Inflows
Emerging-market debt funds attracted inflows of $720 million in the week ended Aug. 9, Morgan Stanley said in a report, citing data from U.S.-based research firm EPFR Global.The rupee had its biggest weekly gain in six weeks amid speculation the nation’s new finance minister will announce measures to narrow the budget deficit and attract investment.
Palaniappan Chidambaram, in his first speech after taking office, said Aug. 6 that he will unveil steps for fiscal consolidation and clarify tax laws. Disinvestment Secretary Mohammad Haleem Khan said Aug. 8 the government may start its asset-sale program next month to boost revenue. India plans to narrow its budget shortfall to 5.1 percent of gross domestic product from 5.8 percent the previous year, according to estimates released in March.
Malaysian Exports
Malaysia’s ringgit rose for a second week after trade data released Aug. 8 boosted optimism the Southeast Asian nation’s economy is withstanding the global slowdown. Exports rose 5.4 percent in June from a year earlier, exceeding economists’ estimates for a 3.1 percent increase. Factory output gained 3.7 percent, an 11th straight month of expansion, government figures showed Aug. 9.“The Malaysian data was generally positive and that should feed into a fairly robust GDP growth outcome,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) in Singapore. “We’re seeing money coming back into Asia, with the prospect of fresh stimulus from the major economies.”
Elsewhere, Taiwan’s dollar was little changed this week at NT$29.990 against its U.S. counterpart, Indonesia’s rupiah and the Philippine peso slipped 0.1 percent to 9,478 and 41.890, respectively. Vietnam’s dong was little changed at 20,853.
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