Asian Currencies Gain This Week on Speculation Rates to Rise

Asian currencies strengthened this week, with Singapore’s dollar reaching a record and Malaysia’s ringgit a 13-year high, on speculation regional central banks will keep raising borrowing costs to curb inflation.

The Bloomberg-JPMorgan Asia Dollar index rose to its highest level since 1997 as overseas investors bought a combined $1.7 billion more stocks than they sold in India, South Korea, Taiwan and Thailand this week, according to exchange data. The Bank of Thailand lifted interest rates on April 20 for the sixth time in less than a year, and signaled more tightening is likely. Malaysia reported the same day that consumer prices rose 3 percent in March from a year earlier, the most since April 2009.

“Inflation pressure raises the possibility of a rate increase next month, which supports the ringgit,” said Suresh Kumar Ramanathan, foreign-exchange strategist at Kuala Lumpur- based CIMB Investment Bank Bhd. “U.S. dollar funding costs are still low, and investors are going long Asian currencies.”

Singapore’s dollar gained 1 percent for the week to S$1.2333 against its U.S. counterpart and touched S$1.2329, the strongest level since at least 1981. The ringgit rose 0.6 percent to 3.0045 in Kuala Lumpur and reached 3.0034, the highest level since October 1997.

Asian currencies also gained after rising earnings at companies including Apple Inc. boosted confidence in the global economic recovery and U.S. spending.

Apple, the maker of the iPhone, said this week that second- quarter profit almost doubled. Of the 76 companies in the Standard & Poor’s 500 Index that posted earnings since April 11, 75 percent have beaten analyst estimates for per-share profit, according to data compiled by Bloomberg.
Intervention Concern

The won slipped 0.1 percent yesterday to 1,080.80 per dollar on speculation the central bank would intervene to curb appreciation. Gains halted at 1,078.30 on April 21, matching the highs set on Sept. 8, 2008, and Aug. 28, 2008, creating resistance for the local currency, or a level at which sell orders are clustered. For the week, the won appreciated 0.8 percent.

“The won benefitted this week mainly as improved earnings and the global economic outlook boosted investment into higher- risk assets,” said Byeon Ji Young, a currency analyst at Woori Futures Co. in Seoul. “Concerns that authorities may step in to curb the won’s appreciation are limiting further gains.”

Finance Minister Yoon Jeung Hyun said yesterday the government will step up monitoring of financial markets as global capital flows into South Korea may see more volatility with U.S. quantitative easing nearing an end. Yoon also said an increase in short-term external debt at some financial companies led to a probe into foreign-exchange derivatives trading.
Yuan Appreciation

China’s yuan climbed to the highest level since 2007 on speculation the central bank will allow faster currency gains to help temper inflation.

The currency appreciated 0.2 percent to 6.5067 per dollar in the spot market yesterday and touched a 17-year high of 6.5067, according to the China Foreign Exchange Trade System.

More rapid appreciation may be a tool for curbing prices, Wang Yong, a professor at the People’s Bank of China’s training center in the city of Zhengzhou, wrote in a commentary published in yesterday’s Securities Times newspaper. The central bank set the yuan’s reference rate 0.11 percent stronger at 6.5156 per dollar, the highest level since July 2005.

“The frequent record highs in the reference rate are pushing up appreciation bets in the offshore market,” said Liu Dongliang, a Shenzhen-based senior analyst at China Merchants Bank Co., the country’s sixth-largest lender by market value. “There won’t be any one-off move in the foreseeable future, especially when the trade surplus narrows.”
Record Export Orders

Taiwan’s dollar rose to the strongest level in more than two months after the government reported April 20 export orders climbed 13.4 percent to a record $38.9 billion in March as a drop in shipments to Japan was compensated for by increases to the U.S. and China.

“The export orders figures showed Taiwan’s exports remain competitive,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “The appreciating trend will probably continue next week, and the currency may test the NT$28.7 level.”

Taiwan’s dollar strengthened 0.4 percent this week to NT$28.930, according to Taipei Forex Inc. The currency touched NT$28.860 yesterday, the strongest level since Feb. 10.

Elsewhere, Indonesia’s rupiah gained 0.5 percent this week to 8,623 per dollar and Thailand’s baht strengthened 0.7 percent to 29.94. India’s rupee and the Philippine peso were little changed at 44.3675 and 43.285.