Rupee, won lead weekly currency gains in Asia

Singapore/Bangkok: India’s rupee and South Korea’s won led gains in Asian currencies this week as foreign funds increased holdings of emerging market assets amid speculation global central banks will ease monetary policy to spur growth.

China’s exports increased 1 per cent in July, less than the median estimate of economists in a Bloomberg survey for an 8 per cent gain and June’s 11.3 per cent pace, official data showed yesterday. Inflation in the world’s second-largest economy was 1.8 per cent last month, the least since January 2010, according to a report on Thursday. Germany backed European Central Bank (ECB) President Mario Draghi’s bond-buying plan this week to tackle the region’s debt crisis.

“Asian currencies continue to gain ground against the dollar, pricing in a higher probability that the Federal Reserve and ECB will satisfy expectations for further significant monetary easing,” Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, a unit of Bank of Nova Scotia, said yesterday. “Slower inflation definitely does add to speculation of easing in China.”

The rupee strengthened 0.8 per cent this week to 55.2850 per dollar in Mumbai, according to data compiled by Bloomberg. South Korea’s won rose 0.4 per cent to 1,130.45, Malaysia’s ringgit advanced 0.2 per cent to 3.1194, and the Thai baht gained 0.3 per cent to 31.48. China’s yuan appreciated 0.2 per cent to 6.3600.

The Bloomberg-JPMorgan Asia Dollar Index touched 115.73 on Thursday, the highest level since May 15, and was little changed from a week earlier. Global funds pumped more than $4 billion (Dh14.7 billion) into stocks in South Korea, Taiwan, Thailand, and Indonesia in the first four days of this week, exchange data show.

Bond inflows

Emerging-market debt funds attracted inflows of $720 million in the week ended Thursday, Morgan Stanley said in a report, citing data from US-based research firm EPFR Global.

The rupee had its biggest weekly gain in six weeks amid speculation the nation’s new finance minister will announce measures to narrow the budget deficit and attract investment.

Palaniappan Chidambaram, in his first speech after taking office, said on August 6 that he will unveil steps for fiscal consolidation and clarify tax laws. Disinvestment Secretary Mohammad Haleem Khan said on Wednesday the government may start its asset-sale programme next month to boost revenue. India plans to narrow its budget shortfall to 5.1 per cent of gross domestic product from 5.8 per cent the previous year, according to estimates released in March.

Malaysian exports

Malaysia’s ringgit rose for a second week after trade data released on Wednesday boosted optimism the Southeast Asian nation’s economy is withstanding the global slowdown. Exports rose 5.4 per cent in June from a year earlier, exceeding economists’ estimates for a 3.1 per cent increase. Factory output gained 3.7 per cent, an 11th straight month of expansion, government figures showed on Thursday.

“The Malaysian data was generally positive and that should feed into a fairly robust GDP growth outcome,” Jonathan Cavenagh, a strategist at Westpac Banking Corp. in Singapore, said. “We’re seeing money coming back into Asia, with the prospect of fresh stimulus from the major economies.”

Elsewhere, Taiwan’s dollar was little changed this week at NT$29.990 against its US counterpart, Indonesia’s rupiah and the Philippine peso slipped 0.1 per cent to 9,478 and 41.890, respectively. Vietnam’s dong was little changed at 20,853.