Buoyed by US third-quarter report, Asian currencies rise

SINGAPORE - Asian currencies rose last week, led by Malaysia's ringgit and Singapore's dollar, on optimism the global recovery is intact after the US economy grew more than estimated in the third quarter.

The world's biggest economy grew at a 2.6 percent annual rate, more than the 2.5 percent reported earlier, the Commerce Department said on Dec 22. India's gross domestic product will increase 8.5 percent in the year ending March, the fastest pace since 2008, the nation's central bank said last week.

"Some players are positioning themselves for the next year," said Mirza Baig, a Singapore-based currency strategist at Deutsche Bank AG, the world's largest foreign-exchange trader. "Generally, everybody's theme is that Asian currencies will do well next year."

The Bloomberg-JPMorgan Asia Dollar Index gained 0.5 percent last week, the most since the five-day period ended Dec 3, to 115.14 in Hong Kong. The ringgit rose 1.2 percent to 3.0930 per dollar, the Singapore dollar appreciated 0.8 percent to S$1.3004 and India's rupee advanced 0.5 percent to 45.115, according to data compiled by Bloomberg.

The ringgit climbed for a fourth successive day on optimism Malaysia's growth outlook will spur global funds to add to holdings of local assets. The nation's economy will expand 6.7 percent this year, the most since 2004, and 5.3 percent in 2011, the International Monetary Fund forecast on Oct 6.

"People are talking about how good this year has been and how well the economy is going to do next year," said Mohd Zaki Talib, a currency trader at RHB Bank Bhd in Kuala Lumpur.

Singapore's dollar traded at its strongest level since Dec. 15 after data on Friday showed factory output rose at the fastest pace in six months. Manufacturing, which accounts for about a quarter of the economy, climbed 39.8 percent in November from a year earlier, after a revised 29.8 percent increase in October, the Economic Development Board said.

China's yuan advanced 0.4 percent last week to 6.6270 per dollar. The premium to buy the currency outside the Chinese mainland disappeared after Hong Kong's central bank said it will set up a fund to ensure supply of the currency for cross-border trade settlement. The premium reached 2.6 percent on Oct 19, reflecting a shortage of the yuan since offshore trading began in July.

Hong Kong banks will be allowed to tap the 20 billion yuan ($3 billion) fund from next month should the city's yuan-clearing bank run out of funds set under a quarterly quota.

Bloomberg News

(China Daily 12/27/2010 page14)