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Asian Currencies Advance as Greece Debt Optimism Spurs Investment Inflows

Wednesday, 08 February 2012 | 13:05
Asian currencies gained for a second day, led by Thailand’s baht, on speculation Greece is making progress in efforts to secure additional international aid.
The Bloomberg-JPMorgan Asia Dollar Index approached the highest level since September as exchange data showed global funds poured $3.9 billion this month into Indian, South Korean, Taiwanese and Thai stocks. Greek Prime Minister Lucas Papademos is scheduled to meet the heads of three political parties today after government officials held “constructive” talks with private bondholders, according to a statement yesterday from the International Institute of Finance.
“The Greek progress has lifted market sentiment as people see a glimpse of hope now,” said Stella Lee, president of Success Futures & Foreign Exchange Ltd. in Hong Kong.
The baht rallied 0.6 percent to a three-month high of 30.76 per dollar as of 3:42 p.m. in Bangkok, according to data compiled by Bloomberg. The Philippine peso climbed 0.4 percent to 42.22 and Indonesia’s rupiah gained 0.5 percent to 8,943. The Asia Dollar Index, which tracks the 10 most-traded currencies in the region excluding the yen, rose 0.2 percent.
Pacific Investment Management Co., which runs the world’s largest bond fund, sees Asian currencies gaining support as near-zero U.S. interest rates fuel demand for higher-yielding assets, Ramin Toloui, the company’s global co-head for emerging markets, said in an interview in Hong Kong yesterday. Last month, the Federal Reserve signaled it will keep rates near zero through late 2014.
Support From China
“Fund flows into bonds and stocks are a very important factor for Asian currencies,” said Amonthep Chawla, a Bangkok- based analyst at Kasikornbank Pcl. “We still have some risk factors because Greece hasn’t yet finished talks.”
China may “move shortly” to help Europe resolve its debt crisis by providing an investment of as much as 100 billion euros ($133 billion) to its bailout fund, Yuan Gangming, an economist at the Chinese Academy of Social Sciences, said in an interview in Beijing on Feb. 6.
South Korea’s won closed 0.3 percent stronger at 1,115.70 per dollar to approach a three-month high while the rupiah was headed for its best gain in two weeks. The two nations’ central banks meet tomorrow to set interest rates.
Rate Decisions
The Bank of Korea will hold its seven-day repurchase rate at 3.25 percent, according to 18 of 19 economists surveyed by Bloomberg News. One predicts a reduction to 3 percent. Bank Indonesia will maintain its reference rate at 6 percent, 11 of 15 economists in a separate survey forecast, while four expect a cut to 5.75 percent.
China’s yuan appreciated 0.17 percent to 6.2945 per dollar at the close in Shanghai, near an 18-year high of 6.2919 set on Jan. 4. The People’s Bank of China set its fixing 0.14 percent stronger today, the most since Dec. 30, before Vice President Xi Jinping visits Washington next week.
“The yuan’s reference rate is likely to stay strong, if not strengthen further, in the next few days,” said Lee at Success Futures & Foreign Exchange. “It could facilitate peaceful bilateral talks.”
Elsewhere, India’s rupee rose 0.2 percent to 49.1350 per dollar and Malaysia’s ringgit gained 0.2 percent to 3.0020 as financial markets reopened this week after two holidays. Taiwan’s dollar gained 0.1 percent to NT$29.53 and Vietnam’s dong added 0.2 percent to 20,925.
Source: Bloomberg
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