Asia Currencies Post Weekly Gain as Data Shows Faster Recovery

Singapore - Asian currencies strengthened this week, led by Singapore’s dollar and Malaysia’s ringgit, after government reports showed economic recoveries in the region are gathering pace.

The MSCI Asia-Pacific Index of shares rallied 2.1 percent and bond yield premiums helped attract fixed-income investors as the Federal Reserve damped speculation U.S. interest rates will be raised. The Philippines predicts economic growth will exceed the government’s target this year, while Taiwan data yesterday showed export orders surged the most on record.

“Recovery momentum in Asia is still intact and should continue to benefit from the uptick in the manufacturing cycle,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd. “The long-term picture should continue to favor Asian and emerging-market currencies.”

Singapore’s dollar appreciated 0.5 percent to S$1.4079 against the U.S. currency as of 4:53 p.m. local time, from S$1.4155 on Feb. 19, while the ringgit rose 0.3 percent to 3.4020, according to data compiled by Bloomberg. The peso advanced 0.3 percent to 46.135, according to Tullett Prebon Plc.

South Korea’s won and Indonesian rupiah have led regional gains in the past 12 months, strengthening 31 percent and 28 percent, respectively. Interest rates of zero to 0.25 percent in the U.S. boosted so-called carry trades, in which investors borrow at low rates to purchase higher-yielding assets elsewhere.

‘Yield Hungry Investors’

Emerging-market bond funds received net inflows for a 16th week from “yield hungry investors,” according to a Feb. 25 statement from EPFR Global.

Investors ploughed more than $3.5 billion into debt sold by developing nations this year, compared with a record $8 billion in 2009, said the Cambridge, Massachusetts-based research company that tracks $12 trillion of assets worldwide.

Fed Chairman Ben S. Bernanke said this week that the U.S. economy is in a “nascent” recovery that still requires its target rate for overnight loans to be kept at near zero “for an extended period.”

The Philippine peso was the best-performing currency in Asia this month on optimism money sent home by Filipinos working abroad will increase this year and help support the economy.

Economic growth may exceed the government’s 3.6 percent target in 2010 compared with an annualized 0.9 percent expansion last year, central bank Deputy Governor Diwa Guinigundo said yesterday. The 9 million Philippine nationals employed overseas repatriated a record $17.3 billion in 2009, up 5.6 percent from the previous year. Those remittances will rise 6 percent this year, according to official estimate.

“Remittances are still a big story and prospects for growth are better,” saidLito Mercado, head of trading at Rizal Commercial Banking Corp. in Manila. “Growth in remittances could be closer to 10 percent this year.”

Manufacturing Boost

Singapore’s industrial production rose 39.4 percent in January from a year earlier, twice the pace estimated by economists in a Bloomberg survey, according to government figures today. Taiwan, Thailand and Malaysia this week released data showing their economies emerged from recessions in the final quarter of 2009, with all three reporting faster expansions than economists anticipated.

“The Asia data flow remains fairly strong,” Sebastien Barbe, head of emerging-market research at Credit Agricole CIB in Hong Kong, wrote in a research note today.

Improved Confidence

South Korea’s won appreciated 0.1 percent from a week ago to 1,159.85 per dollar in Seoul. It gained 0.3 percent today, as the outlook for factory production brightened.

An index measuring manufacturers’ expectations climbed to a seven-year high of 101, from 92 a month ago, the Bank of Korea said today.

“The manufacturing data helps the won,” said Thio Chin Loo, a senior currency strategist at BNP Paribas SA in Singapore. “There is some profit-taking in dollar positions before the weekend.”

India’s rupee today strengthened the most in almost seven weeks on speculation sales of state assets will draw investment from abroad. The country plans to raise 400 billion rupees ($8.7 billion) selling stakes in state-owned companies in the 12 months starting April 1, up from about 250 billion rupees in the current fiscal year, Finance Minister Pranab Mukherjee said.

The rupee climbed 0.6 percent today to 46.126 versus the greenback, giving a weekly advance of 0.4 percent, according to data compiled by Bloomberg. India’s gross domestic product rose 6 percent from a year earlier in the fourth quarter, after gaining 7.9 percent in the previous three months, and Mukherjee said growth may reach 8.5 percent in the coming fiscal year.

Elsewhere, Taiwan’s dollar rose 0.1 percent for the week to NT$32.085 against its U.S. counterpart and the baht advanced 0.3 percent to 33.07. China’s yuan advanced 0.1 percent to 6.8261, from 6.8330 on Feb. 12, before the weeklong Lunar New Year holiday.