August 30, 2010Korean Won Paces Rally in Asian Currencies on Fed, Bank of Japan Support
Asian currencies rose, led by the biggest gain in South Korea’s won in two weeks, as the Federal Reserve pledged to shore up the economy and Japan extended a bank-loan program to help stimulate growth.
The won trimmed this month’s loss to 0.2 percent after the government yesterday said it will relax mortgage rules to revive the housing market. Malaysia’s ringgit traded near a 13-year high as Fed Chairman Ben S. Bernanke said on Aug. 27 the central bank “will do all that it can” to support expansion in the world’s largest economy. The Bank of Japan raised its lending facility by 10 trillion yen ($117 billion) to 30 trillion yen at an emergency meeting today.
“The Fed acknowledged the slowdown risk and is attempting to put a floor to it,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “The market sees it as positive for risk-taking.”
The won appreciated 0.5 percent to 1,190.57 per dollar as of 1:08 p.m. in Seoul, according to data compiled by Bloomberg. The ringgit climbed 0.4 percent to 3.1385, set for a third month of gains, and the Thai baht advanced 0.2 percent to 31.27.
Asian currencies followed regional stocks higher as Bernanke signaled more stimulus measures will be taken if economic growth slows. The MSCI Asia-Pacific Index of shares rose 1.6 percent, the biggest gain since July 23.
Thai Exporters
A Commerce Department report on Aug. 27 showed U.S. gross domestic product increased 1.6 percent in the second quarter compared with a previous estimate of 2.4 percent. The U.S. buys about 10 percent of Asian goods shipped overseas, according to government statistics.
The Fed comments “give investors confidence on the outlook of the U.S. economy,” said Eric Hsing, a debt trader at First Securities Inc. in Taipei. “That will boost short-term risk appetite for Asian assets.”
India’s rupee gained before a government report tomorrow that’s forecast to show Asia’s third-largest economy expanded last quarter at an annual rate of 8.8 percent, versus 8.6 percent in the first three months of the year, based on the median forecast in a Bloomberg News survey.
The currency climbed 0.2 percent to 46.80 per dollar, trimming the month’s loss to 0.8 percent.
Thailand’s baht appreciated for a fourth day on speculation exporters converted income as the month-end approaches. A government report tomorrow may show manufacturing rose for an 11th month in July, according to a Bloomberg News survey of economists.
“The Thai baht will probably strengthen more and so we may see more exporter selling of the dollar,” said Kornvica Pimukmanaskit, an analyst at Kasikornbank Pcl in Bangkok. “Asian growth is better than in the U.S. and Europe, so money is still flowing into the region.”
Elsewhere, the Indonesian rupiah gained 0.4 percent to 9,010 per dollar, Taiwan’s dollar advanced 0.1 percent to NT$32.008 and Singapore’s currency rose 0.3 percent to S$1.3534. China’s yuan was little changed at 6.8010 from 6.7982 on Aug. 27.
read more @ http://www.bloomberg.com/news/2010-08-30/korean-won-paces-rally-in-asian-currencies-on-fed-bank-of-japan-support.html
