2012-11-09 13:42:28Roosevelt

Asia Currencies Advance

Asian currencies rose this week as President Barack Obama’s re-election increased the likelihood the Federal Reserve will keep boosting the supply of dollars that can be invested in emerging markets. India’s rupee fell.


Global funds pumped a net $240 million into Taiwanese and Philippine stocks this week, exchange data show, while buying $71 million more Thai sovereign notes than they sold, according to Thai Bond Market Association figures. China’s yuan gained for a 14th week, the longest winning streak since March 2008, on speculation the government will roll out more stimulus measures amid the slowest inflation in almost three years.


While there will be plenty of liquidity provided by the Fed, there’s an issue over the fiscal cliff, making investors reluctant to take riskier positions,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Funds are coming into emerging markets.”


The Taiwan dollar advanced 0.9 percent this week to NT$29.032 against the greenback as of 11:46 a.m. in Taipei, according to data compiled by Bloomberg. Thailand’s baht strengthened 0.3 percent to 30.65, while South Korea’s won and the Philippine peso gained 0.2 percent to 1,088.57 and 41.083, respectively. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, added 0.1 percent.


Global Peso Bonds

Obama faces negotiations with a Republican-led House to avoid more than $600 billion of tax increases and spending cuts that are set to take effect in January, the so-called fiscal cliff. Republican challenger Mitt Romney had said he wouldn’t reappoint Fed Chairman Ben S. Bernanke in 2014. The central bank chief announced a third round of assets purchases in September and said interest rates may remain near zero until mid-2015.


The peso traded today near a four-year high reached yesterday after the Southeast Asian nation raised the equivalent of $750 million from a sale of 10-year peso bonds, which will be settled in dollars. President Benigno Aquino has won upgrades to the nation’s credit ratings this year from Moody’s Investors Service and Standard & Poor’s as he takes steps to reduce the budget deficit and lure foreign cash.


We still like the Philippines, given the improving fundamentals,” Wee-Ming Ting, the Singapore-based head of Asian fixed-income at Pictet Asset Management, which oversees more than $24 billion of emerging-market debt, said yesterday.


Yuan Tests Limit

The yuan advanced 0.08 percent to 6.2382 per dollar today, the most in two weeks, and touched the upper limit of its trading band for a fifth day. The currency gained 0.05 percent this week. Consumer prices rose 1.7 percent in October from a year earlier, the least since January 2010, official data showed today. The median estimate in a Bloomberg survey was for a 1.9 percent gain. China’s central bank governor and statistics chief signaled October data will show improving growth.


There have been inflows betting on a rebound in the economy,” said Bruce Yam, a currency strategist at Sun Hung Kai Financial Ltd. in Hong Kong. “Easing inflation signals China’s growth is still subdued, which boosts the case for more measures to stimulate consumption.”


India’s rupee dropped 0.9 percent this week to 54.2950 per dollar on concern U.S. tax increases and spending cuts will aggravate the global slowdown. It gained 0.2 percent today.


Elsewhere, Malaysia’s ringgit declined 0.3 percent this week to 3.0623 per dollar after the central bank kept its overnight policy rate on hold at 3 percent yesterday. Indonesia’s rupiah fell 0.2 percent to 9,634 and Vietnam’s dong was little changed at 20,845.