Korean Won, Rupiah, Rupee Cap Weekly Gains as Inflows Pick Up
April 10 (Bloomberg) — South Korea’s won, Indonesia’s rupiah and India’s rupee strengthened for a fifth straight week as signs a global recession is abating bolstered investors’ risk appetite, helping Asia’s emerging markets attract funds.
The won today touched 1,300 per dollar for the first time in three months on speculation record-low borrowing costs and government stimulus will revive an economy on the brink of recession. Asian equity funds outside Japan drew the largest amount of new money in a year for the week ending April 8, according to EPFR Global, a research company based in Cambridge, Massachusetts.
“The market is pricing in a mild change in the view of the economy,” said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “Offshore players are offloading dollars.”
The won strengthened 0.6 percent this week to 1,333 per dollar as of 3 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It earlier rose as high as 1,300.
India’s rupee climbed 0.8 percent to 50.01 and this week traded stronger than 50 for the first time since February. Indonesia’s rupiah advanced 1.4 percent to 11,310. Financial markets in India, Indonesia and the Philippines were closed today for the Easter holiday.
The won rose 14 percent against the dollar in the past month, Asia’s best performance. Bank of Korea Governor Lee Seong Tae said yesterday the pace of the nation’s economic slowdown has “moderated significantly.” The economy will shrink 2.4 percent this year, the first contraction since 1998, before expanding 3.5 percent in 2010, the central bank said today.
Dollar Bond Sale
This week’s gain in the won was also supported by the government’s $3 billion sale of global bonds. Proceeds from Korea’s first international bond issuance in three years will be used to support a currency that tumbled 26 percent against the dollar in the past 12 months.
Data in the past two weeks suggests the economy may be improving. A government report showed factory output in February had its biggest monthly gain since 1987 and a central bank survey showed manufacturers’ were the least pessimistic in five months.
The rupiah gained on speculation the central bank bought the currency to keep it stable before local markets were closed yesterday for the parliamentary elections. The currency also advanced as polls showed President Susilo Bambang Yudhoyono’s Democrat Party may more than double its seats in parliament, reducing the need for coalition partners that have blocked some of his economic stimulus proposals.
India’s currency strengthened as foreign investors’ purchases of Indian shares this month already exceeded the total for March.
Thailand’s baht rose this week on speculation global funds bought stocks as Prime Minister Abhisit Vejjajiva said he would remain in office and refrain from using force against anti- government demonstrators.
Abhisit has vowed not to resign and rejected calls for new elections after protesters used taxis to block Bangkok’s streets. Global funds bought $123 million more Thai stocks than they sold this month through yesterday, according to stock exchange data.
“Let’s put it this way, things have been relatively calm so far and the government has said it won’t use force,” said Chatchawan Jumruswittayawong, a foreign-exchange trader at Bank of Ayudhya Pcl in Bangkok. “Investors are waiting to see if the situation turns worse,” next week, he said.
The baht gained 0.1 percent this week to 35.36 per dollar, according to data compiled by Bloomberg.
Malaysia’s ringgit completed its first weekly loss in five after the nation’s factory output fell for a sixth month, raising concern an economic slowdown is deepening. The currency dropped 1 percent to 3.6155 per dollar, according to data compiled by Bloomberg.
A government report yesterday showed industrial production fell 14.7 percent from a year ago in February, compared with a 13.5 percent drop in a Bloomberg survey. Malaysian Prime Minister Najib Razak yesterday replaced a quarter of the Cabinet, less than a week after taking office, in a bid to resurrect support for the ruling coalition.
“We’ve seen a lot of corporate orders for dollars this week,” said Jamil Baharuddin, a treasury dealer at RHB Bank in Kuala Lumpur. “We