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Asian currencies gain on US, China stimulus talk

Speculation spurs demand for region’s exports and financial assets

Gulf News

Singapore: Asian currencies advanced on speculation policy makers from the US to China will increase economic stimulus measures to support growth, spurring demand for the region’s exports and financial assets.

Malaysia’s ringgit reached a two-week high and South Korea’s won rose for a fifth day, its longest rally in a month, after data showed housing starts in America rose 6.9 per cent in June to the highest level since 2008.

The Federal Reserve is prepared to “take further action as appropriate” and has the capacity to make more bond purchases, chairman Ben S. Bernanke said in his Congress testimony yesterday.

Asian economies may need to ease further as Europe’s debt crisis damps growth, the Asian Development Bank said on Thursday.

“The market is hoping that some stimulus measures from the US and China are on the table,” said Irene Cheung, a Singapore-based currency strategist at Australia & New Zealand Banking Group.

“This will be supportive of risk assets.”

The ringgit strengthened 0.4 per cent to a two-week high of 3.1510 per dollar as of 10.57am in Kuala Lumpur, according to data compiled by Bloomberg.

The won climbed 0.4 per cent to 1,138.23, the Philippine peso gained 0.1 per cent to 41.635 and Thailand’s baht advanced 0.2 per cent to 31.63.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s currencies, rose for a fifth day while its 60-day historical volatility was steady at 3.68 per cent.

The MSCI Asia Pacific Index of equities rose 1.5 percent.

Hyundai stake sale

Korea’s currency advanced after investors bought $129 million (Dh473.81 million) of local shares more than they sold this week through Wednesday. Hyundai Heavy Industries Co, the world’s largest shipbuilder, sold a 705 billion won (Dh2.2 billion) stake in Hyundai Motor Co, boosting the prospect of fund inflows.

The stake sale “will support the won,” said Byeon Ji Young, a Seoul-based currency analyst for Woori Futures Co.

China’s yuan traded at 6.3703 per dollar in Shanghai, compared with 6.3702 yesterday.

The People’s Bank of China set the currency’s daily reference rate at 6.3126, or 0.02 per cent stronger than Wednesday.

China has “relatively large” room to boost fiscal spending to spur growth, Zhang Peng, a researcher with the Fiscal Research Institute at the Ministry of Finance in Beijing, said yesterday in an interview. China needs to adopt a “moderately easing” policy when growth is below 8 percent, the Shanghai Securities News reported on Thursday, citing Fan Jianping, chief economist at the State Information Centre.

The world’s second-largest economy expanded 7.6 per cent last quarter from a year earlier, the slowest pace in more than three years, according to the latest government data.

“Given reviving growth is a priority, China has to implement policies that encourage investment, which could spur some demand for the yuan,” said Daniel Chan, executive vice-president at Glory Sky Global Markets Ltd. in Hong Kong.

“Yet, the yuan won’t appreciate much because the government also wants to safeguard export growth.”

Elsewhere, Indonesia’s rupiah rose 0.03 per cent to 9,478 per dollar, Taiwan’s dollar gained 0.1 per cent to NT$29.970 and the Vietnamese dong was little changed at 20,845.