Asian Currencies Poised for Best Week in Two Months on Recovery

By Bloomberg News

Asian currencies headed for the best week in more than two months, led by Malaysia’s ringgit, on speculation an economic recovery in the U.S. will boost demand for the region’s exports.

Gross domestic product in the world’s largest economy rose faster than previously estimated in the fourth quarter, while orders for durable goods climbed more than forecast in February, reports showed this week. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies in the region excluding the yen, advanced 0.2 percent since March 22.

“The expectation is that the U.S. economy will continue to improve,” said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “With a stronger U.S. recovery, export- oriented Asian economies will benefit, strengthening their currencies.”

The ringgit strengthened 0.8 percent this week to 3.0870 per dollar as of 12:06 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. South Korea’s won climbed 0.5 percent to 1,113.23 and Taiwan’s dollar rose 0.1 percent to NT$29.866.

The Asia Dollar Index lost 0.2 percent this month as global investors pulled more than $3 billion out of the stock markets of South Korea and Taiwan amid concern Europe’s debt crisis will worsen.

The Malaysian currency touched a five-week high of 3.0859 on March 25 after the central bank said last week that gross domestic product will increase as much as 6 percent this year from 5.6 percent in 2012. Prime Minister Najib Razak has embarked on a $444 billion spending program to build railways, roads and power plants in an effort to lift the country to developed-nation status by 2020.

Yuan Rises

The yuan touched a 19-year high today after the People’s Bank of China raised the reference rate to the strongest level in more than 10 months.

The PBOC increased the daily fixing by 0.08 percent to 6.2689 per dollar, the highest since May 2, 2012. The currency is allowed to trade 1 percent either side of the rate. The Purchasing Managers’ Index for manufacturing in March will be 51, indicating a sixth month of expansion, according to the median estimate in a Bloomberg News survey of economists before official data on April 1.

“Investors continue to be convinced about the gradual appreciation of the yuan,” said Samson Tu, a Taipei-based fund manager at Uni-President Assets Management Corp., which oversees $700 million.

The yuan advanced 0.04 percent this week to 6.2100 per dollar, prices from the China Foreign Exchange Trade System show. The currency rose as high as 6.2095 today, matching the strongest level since the government unified official and market exchange rates at the end of 1993.

Korean Won

The won was set for the first weekly gain in almost a month after data showed South Korea’s current-account surplus widened in February.

The surplus increased to $2.71 billion from $2.33 billion in January, the Bank of Korea said yesterday. The gap for March is likely to be similar as improving exports will offset an expected rise in dividend payments to foreign investors, according to Cho Yong Seung, a central bank official.

Elsewhere, Thailand’s baht was steady from a week ago at 29.28 per dollar, according to data compiled by Bloomberg. Financial markets in India, Indonesia and Philippines are closed today. India’s rupee gained 0.1 percent from March 22 to 54.28 per dollar yesterday, while Indonesia’s rupiah advanced 0.3 percent to 9,715. The Philippine peso appreciated 0.1 percent to 40.823 yesterday.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai atxchen45@bloomberg.net; Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

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