Philippine Peso leads Asian currency gains as recovery builds
Monday, 7 December 2009
SINGAPORE, Dec 6 (Bloomberg): Asian currencies gained this week, led by the Philippine peso and South Korea's won, as signs a regional economic recovery is gathering pace boosted appetite for emerging-market assets.
Korea's won posted its biggest weekly advance in seven months after a government report showed the economy expanded at a faster pace than initially estimated in the third quarter. The MSCI Asia-Pacific Index of regional shares climbed 5.5 per cent in the week to the highest level since September last year, after data showed China's manufacturing growth in November held at the fastest pace in 18 months and the export slump eased in Thailand, Indonesia and India.
"The fundamental story hasn't changed and we are still very positive on Asian currencies as we see more and more signs of economic recovery," said Wai Ho Leong, an economist with Barclays Plc in Singapore.
The peso strengthened 2.6 per cent this week to 46.01 per dollar in Manila, according to Tullett Prebon Plc. The won jumped 1.9 per cent to 1,152.93 and the Indonesian rupiah rose 1.3 per cent to 9,415, according to data.
The Bloomberg-JPMorgan Asia Dollar Index reached the highest level since September 2008 on Dec 3 as concerns eased Dubai World will default on its debt. Dubai World, one of the emirate's three main state-related holding companies, started negotiating with banks to restructure $26 billion of debt.
A government statement on Nov 25 saying Dubai World may delay repayment sent global financial markets tumbling and the dollar rising.
"There was an initial knee-jerk reaction but people now think Dubai World will be able to make good on its debt payments eventually," said Benedicto Jose Arcinas, treasurer at Export & Industry Bank in Manila. "The mood for the strengthening peso continues, driven by inflows and the slackening of demand for imports and the general absence of demand for dollars."
The US Dollar Index traded on ICE futures in New York, which tracks the greenback against those of six major trading partners, dropped for a second week, falling 0.4 per cent ahead of the Labour Department's monthly jobs report yesterday.
Economists forecast that 125,000 workers lost their jobs in November after a 190,000 decline in October, while the unemployment rate held at 10.2 per cent.
South Korea's gross domestic product increased 3.2 per cent in the three months ended Sept 30, compared with the initial 2.9 per cent estimate reported in October, the central bank said in Seoul yesterday.
"It should give a brief lift to the Korean won as risk appetite remains relatively strong at the moment," said Callum Henderson, Singapore-based global head of foreign-exchange strategy for Standard Chartered Plc. "The growth recovery seems to be picking up momentum."
Barclays Plc raised its three-month forecast for the won by 3.2 per cent, saying policy makers will tolerate further appreciation to temper the effect of rising food prices on inflation.
The currency will rise 5 per cent to 1,100 per dollar from yesterday's closing rate, according to Barclays, which upgraded its estimate from 1,135 previously. The bank also raised its 12- month forecast to 1,050, compared with 1,100.
Indonesia's rupiah rose the most this week in three months after the central bank on Dec 3 kept its benchmark interest rate at the lowest level since its introduction in May 2005 to boost economic growth.
The Southeast Asian nation's exports increased for the first time in a year in October, rising 10.1 per cent from a year earlier, after a revised 19.8 per cent decline the previous month, data on Dec 1 showed. The $514 billion economy may expand 4.3 per cent this year and between 5 per cent and 5.5 per cent in 2010, the central bank said Dec 3.
Taiwan's dollar pared the week's advance before local elections today that will test support for the ruling Kuomintang party. Voters in 17 of Taiwan's cities and counties will elect mayors, magistrates, city and county councilors.
Gains were also tempered on concern the US jobs data would show employers cut more workers than some economists anticipated. Taiwan's currency rose 0.5 per cent this week to NT$32.170 per dollar, compared with NT$32.345 on Nov 27, according to Taipei Forex Inc.
"The market just wants to see how many seats the KMT will win," said Yili Tang, head of the currency division at Shinkong Life Insurance Co in Taipei. "We still have the US payrolls data and the market will be calmer after the release."
In other Asian trading, Malaysia's ringgit rose 0.9 per cent to 3.3810 against the US currency this week and the Singapore dollar gained 0.4 per cent to S$1.3816. The Thai baht rose 0.4 per cent to 33.11 and India's rupee climbed 0.8 per cent to 46.2975.
Korea's won posted its biggest weekly advance in seven months after a government report showed the economy expanded at a faster pace than initially estimated in the third quarter. The MSCI Asia-Pacific Index of regional shares climbed 5.5 per cent in the week to the highest level since September last year, after data showed China's manufacturing growth in November held at the fastest pace in 18 months and the export slump eased in Thailand, Indonesia and India.
"The fundamental story hasn't changed and we are still very positive on Asian currencies as we see more and more signs of economic recovery," said Wai Ho Leong, an economist with Barclays Plc in Singapore.
The peso strengthened 2.6 per cent this week to 46.01 per dollar in Manila, according to Tullett Prebon Plc. The won jumped 1.9 per cent to 1,152.93 and the Indonesian rupiah rose 1.3 per cent to 9,415, according to data.
The Bloomberg-JPMorgan Asia Dollar Index reached the highest level since September 2008 on Dec 3 as concerns eased Dubai World will default on its debt. Dubai World, one of the emirate's three main state-related holding companies, started negotiating with banks to restructure $26 billion of debt.
A government statement on Nov 25 saying Dubai World may delay repayment sent global financial markets tumbling and the dollar rising.
"There was an initial knee-jerk reaction but people now think Dubai World will be able to make good on its debt payments eventually," said Benedicto Jose Arcinas, treasurer at Export & Industry Bank in Manila. "The mood for the strengthening peso continues, driven by inflows and the slackening of demand for imports and the general absence of demand for dollars."
The US Dollar Index traded on ICE futures in New York, which tracks the greenback against those of six major trading partners, dropped for a second week, falling 0.4 per cent ahead of the Labour Department's monthly jobs report yesterday.
Economists forecast that 125,000 workers lost their jobs in November after a 190,000 decline in October, while the unemployment rate held at 10.2 per cent.
South Korea's gross domestic product increased 3.2 per cent in the three months ended Sept 30, compared with the initial 2.9 per cent estimate reported in October, the central bank said in Seoul yesterday.
"It should give a brief lift to the Korean won as risk appetite remains relatively strong at the moment," said Callum Henderson, Singapore-based global head of foreign-exchange strategy for Standard Chartered Plc. "The growth recovery seems to be picking up momentum."
Barclays Plc raised its three-month forecast for the won by 3.2 per cent, saying policy makers will tolerate further appreciation to temper the effect of rising food prices on inflation.
The currency will rise 5 per cent to 1,100 per dollar from yesterday's closing rate, according to Barclays, which upgraded its estimate from 1,135 previously. The bank also raised its 12- month forecast to 1,050, compared with 1,100.
Indonesia's rupiah rose the most this week in three months after the central bank on Dec 3 kept its benchmark interest rate at the lowest level since its introduction in May 2005 to boost economic growth.
The Southeast Asian nation's exports increased for the first time in a year in October, rising 10.1 per cent from a year earlier, after a revised 19.8 per cent decline the previous month, data on Dec 1 showed. The $514 billion economy may expand 4.3 per cent this year and between 5 per cent and 5.5 per cent in 2010, the central bank said Dec 3.
Taiwan's dollar pared the week's advance before local elections today that will test support for the ruling Kuomintang party. Voters in 17 of Taiwan's cities and counties will elect mayors, magistrates, city and county councilors.
Gains were also tempered on concern the US jobs data would show employers cut more workers than some economists anticipated. Taiwan's currency rose 0.5 per cent this week to NT$32.170 per dollar, compared with NT$32.345 on Nov 27, according to Taipei Forex Inc.
"The market just wants to see how many seats the KMT will win," said Yili Tang, head of the currency division at Shinkong Life Insurance Co in Taipei. "We still have the US payrolls data and the market will be calmer after the release."
In other Asian trading, Malaysia's ringgit rose 0.9 per cent to 3.3810 against the US currency this week and the Singapore dollar gained 0.4 per cent to S$1.3816. The Thai baht rose 0.4 per cent to 33.11 and India's rupee climbed 0.8 per cent to 46.2975.