Asian Currencies: Rupiah, Peso Lead Weekly Gains on Fed, Stocks

June 27 (Bloomberg) -- Indonesia’s rupiah and the Philippine peso had a weekly gain on optimism overseas investors will buy Asian bonds and stocks after the Federal Reserve signaled U.S. interest rates will be kept at near zero.

The rupiah was the biggest gainer this week among Asia’s 10 most-active currencies outside Japan as its 10-year bond yielded 7.6 percentage points more than similar-dated U.S. debt, near the highest in a month. U.S. policy makers said on June 24 they will keep the benchmark interest rate at “exceptionally low levels” for an “extended period.” The peso rose this week after the central bank said the Fed’s decision gives it scope to keep its “accommodative stance.”

“Investors are finally buying back Indonesian assets and that helps the rupiah,” said Mika Martumpal, a currency analyst at PT Bank Commonwealth in Jakarta. “The real interest rate is still competitive and is still more attractive than the U.S. dollar.”

The rupiah climbed 1.8 percent this week to 10,220 a dollar in Jakarta yesterday, according to data compiled by Bloomberg. The peso rose 0.2 percent to 48.305 in Manila, according to Tullett Prebon Plc. The Thai baht rose 0.3 percent to 34.07.

In the coming week, Bank Indonesia will hold its monthly meeting on policy rates. South Korea and Thailand will both report industrial production data and exports.

Payments Surplus

The Indonesian currency strengthened as overseas investors added to their holdings of the nation’s shares following an eight-day run of net sales, according to stock exchange data. Foreign holdings of Indonesian local-currency bonds were at 85.9 trillion rupiah as of June 25 ($8.4 billion) compared with 85.8 trillion rupiah at the end of last week, the Ministry of Finance posted on its Web site.

The peso halted two weeks of declines as central bank Governor Amando Tetangco said on June 25 the Fed’s policy stance “will benefit emerging markets such as the Philippines.” The central bank, which has lowered its overnight borrowing rate in all five meetings since December to 4.25 percent, will hold its next policy meeting on July 9. The Philippine Stock Exchange Index gained a third day, posting a weekly advance.

“The peso’s stronger opening relates to expected improvement in equities,” said Lito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila.

Commodities Climb

Malaysia’s ringgit rose this week on speculation export earnings will improve as prices of crude oil and palm oil climb. The commodities together accounted for 10 percent of Malaysia’s overseas sales in the first four months of this year, government statistics showed. The Kuala Lumpur Composite Index of stocks advanced 1.4 percent this week.

“The ringgit is benefiting from the risk-appetite rally in stocks,” said Tan Voon Ching, a currency trader at OSK Investment Bank Bhd. in Kuala Lumpur. “Higher commodity prices may be a sign of a better recovery outlook but the question remains whether the trend is sustainable.”

The ringgit climbed 0.1 percent this week to 3.5335 in Kuala Lumpur, according to data compiled by Bloomberg. It earlier reached 3.5255, the strongest level since June 18.

Crude oil has risen almost 60 percent this year, while palm oil has climbed about 39 percent.

Elsewhere, the Korean won fell 1.2 percent this week to 1,284.25 and Taiwan’s dollar dropped 0.1 percent to NT$32.925 against the U.S. currency. The Vietnamese dong was barely changed at 17,802 and Singapore’s dollar was little changed at S$1.4542.