Asian Currencies Advance as Growth, Interest-Rate Outlook Support Inflows

Asian currencies strengthened, led by the Malaysian ringgit, on speculation the region’s economic growth will attract funds, and policy makers will raise interest rates further to cool inflation.

The Bloomberg-JPMorgan Asia Dollar Index rose for a third day before a report this week that analysts predict will show Malaysia’s exports increased by the most in nine months from a year earlier in April. All 16 economists surveyed by Bloomberg expect the Bank of Thailand to lift borrowing costs on June 1. The Philippines gross domestic product gained 4.9 percent in the first quarter from a year earlier, compared with 6.1 percent in the previous three months, data showed today.

“We can get some stable growth momentum from here, which is supportive of fund inflows,” said Nik M. Khairul, a treasury dealer at Asian Finance Bank Bhd. in Kuala Lumpur. “As for rates, the market could see another round of increases this year.”

The ringgit advanced 0.6 percent to 3.0160 per dollar as of 11:30 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. Taiwan’s dollar climbed 0.4 percent to NT$28.779, Indonesia’s rupiah gained 0.3 percent to 8,548 and South Korea’s won strengthened 0.2 percent to 1,080.25.

Shipments from Malaysia rose 10.7 percent from a year earlier, the most since July 2010, according to the median forecast in a Bloomberg survey before a trade ministry report on June 3. Bank Negara Malaysia raised its policy rate by a quarter of a percentage point to 3 percent on May 5, saying the economy was expected to “remain firmly on a steady growth path.”
Exporters Convert Income

Asia’s developing economies will expand 8.4 percent this year, outpacing growth of 2.8 percent in the U.S. and 1.6 percent in the euro area, according to International Monetary Fund forecasts published last month.

The Taiwan dollar reached a two-week high and the won touched the strongest level in three weeks on speculation exporters were repatriating income to take advantage of favorable exchange rates. U.S. Treasury Department assistant secretary for international finance Charles Collyns said South Korea should let the won appreciate, the Korea Economic Daily reported.

“Exporters are selling dollars to translate their income at the end of the month, pushing up the won,” said Seo Jeong Hun, a currency analyst at Korea Exchange Bank in Seoul. “The comments from the U.S. Treasury official are giving more room for the won to rise.”
Thai Inflation

Thailand’s baht gained to a one-week high before a report on June 1 that will show consumer prices increased by 4.3 percent in May from a year earlier, the most since September 2008, according to economists surveyed by Bloomberg. The currency rose 0.2 percent to 30.32 per dollar.

“Inflation remains on an uptrend in Asia due in part to solid growth,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “For Thailand, speculation of rate hikes will grow toward the policy meeting and that will put appreciation pressure on the baht this week.”

China’s yuan advanced 0.12 percent to 6.4837 per dollar and touched 6.4834 earlier, the strongest level since 1993. The currency’s reference rate was fixed today at 6.4856 per dollar, the highest level since July 2005.

Elsewhere, the Philippine peso rose 0.2 percent to 43.278 per dollar, according to prices from Tullett Prebon Plc. The Singapore dollar strengthened 0.3 percent to S$1.2337 and India’s rupee gained 0.1 percent to 45.1225.