Asian Currencies: Taiwan Dollar Has Best Week Since December
By Yumi Teso and Jake Lee
June 1 (Bloomberg) -- Taiwan's dollar completed the biggest five-day rally since Dec. 1 on speculation the central bank stemmed a descent that last week reached a 17-month low.
The currency rose for a second week after the central bank yesterday said mutual funds should invest more in local stocks rather than sending money abroad. The island's dollar yesterday touched the strongest since March 2.
``The central bank looks to be really determined to curb declines in the Taiwan dollar and that has pushed up the currency sharply this week,'' said Daisuke Uno, a strategist in Tokyo at Sumitomo Mitsui Banking Corp. ``They probably worry a too-weak currency could encourage fund outflows from stocks and other securities as it cuts the value of investments.''
The Taiwan dollar climbed 0.7 percent this week to NT$33.009 at the 4 p.m. close of onshore trading, exceeding last week's 0.4 percent increase, according to Taipei Forex Inc. It may trade between NT$32.90 and NT$33.20 next week, Uno said.
The local dollar is down 1.3 percent this year, the third- worst performer among the world's 16 most-traded currencies, prompting the central bank yesterday to say Taiwan's mutual-fund companies should emphasize exchange-rate risks to investors rather than leaving them in the fine print when marketing products earmarked for overseas investments.
Taiwan's key interest rate of 2.875 percent is among the lowest in the region, encouraging locals to send money elsewhere to seek higher returns. Money management companies have opened more than 200 mutual funds catered for overseas investment and have $34 billion waiting to be remitted abroad, the central bank statement said.
Spurring Growth
The Philippine peso rose for a second day on speculation the central bank's decision yesterday to keep interest rates on hold will spur lending and growth.
Bangko Sentral ng Pilipinas left its tiered rates unchanged to encourage domestic banks to lend rather than place funds with the central bank. The peso is the second-best-performing currency in Asia this quarter as overseas investors' purchases of the nation's assets helped accelerate growth, pushing the benchmark stock index to a record.
The central bank yesterday kept the overnight rate at which it borrows from banks at 7.5 percent, which applies to the first 5 billion pesos ($108.3 million). For amounts more than that the central bank pays lower rates of 5.5 percent and 3.5 percent in its tiered system, which was introduced in November.
``The strong peso and lower interest rates brought by the tiering contributed to the first-quarter expansion,'' said Jonathan Ravelas, assistant vice president for economic research at Banco de Oro-EPCI Inc. in Manila. ``Expectations of higher growth this year are attracting investors into stocks.''
Above Estimates
The peso gained 0.4 percent to 46.075, the biggest gain since May 22, according to Tullett Prebon Plc, the world's second-largest inter-dealer broker. It appreciated 2.8 percent in May, rising for an 11th month, and by the most since July.
The currency traded near a 6 1/2-year high as the government reported gross domestic product growth of 6.9 percent for the first quarter, beating all estimates in a Bloomberg survey.
South Korea's won touched the highest in two weeks after stock purchases by overseas investors helped send the benchmark equity index to a record.
Strong Equity Inflows
The won rose to as high as 926.40 against the dollar as the Kospi index of stocks completed the best week since June 30. The economy grew for a 16th straight quarter, the Bank of Korea said today, and Vice Finance Minister Kim Seok Dong yesterday said the economy is showing signs of ``recovery.''
``We're seeing strong equity inflows into the region and the Korean won is going to benefit from that,'' said Steven Chang, global markets vice president at State Street Bank & Trust Co. based in Hong Kong. ``Korea is a turnaround story, given all the good news we've had on it and the good flows now coming through.''
The won finished the week little changed at 928.40, according to Seoul Money Brokerage Services Ltd. It may rise to 900 by the end of September, Chang said.
South Korea's currency earlier rose to the strongest since May 17 after the central bank report showed the economy grew 0.9 percent in the three months ended March 30 from the previous quarter, extending an expansion to the longest since the 17 quarters to December 1996. A Ministry of Commerce, Industry and Energy report today said exports climbed 11.9 percent in May from a year ago to a record.
Elsewhere in the region, the Malaysian ringgit fell 0.3 percent to 3.4008 on the week and the Vietnamese dong was down 0.1 percent to 16,088. The Thai baht rose 0.1 percent in the five-day period to 34.57 and the Singapore dollar was little changed at S$1.5301. Markets in Indonesia are closed today for a public holiday.
By Yumi Teso and Jake Lee
June 1 (Bloomberg) -- Taiwan's dollar completed the biggest five-day rally since Dec. 1 on speculation the central bank stemmed a descent that last week reached a 17-month low.
The currency rose for a second week after the central bank yesterday said mutual funds should invest more in local stocks rather than sending money abroad. The island's dollar yesterday touched the strongest since March 2.
``The central bank looks to be really determined to curb declines in the Taiwan dollar and that has pushed up the currency sharply this week,'' said Daisuke Uno, a strategist in Tokyo at Sumitomo Mitsui Banking Corp. ``They probably worry a too-weak currency could encourage fund outflows from stocks and other securities as it cuts the value of investments.''
The Taiwan dollar climbed 0.7 percent this week to NT$33.009 at the 4 p.m. close of onshore trading, exceeding last week's 0.4 percent increase, according to Taipei Forex Inc. It may trade between NT$32.90 and NT$33.20 next week, Uno said.
The local dollar is down 1.3 percent this year, the third- worst performer among the world's 16 most-traded currencies, prompting the central bank yesterday to say Taiwan's mutual-fund companies should emphasize exchange-rate risks to investors rather than leaving them in the fine print when marketing products earmarked for overseas investments.
Taiwan's key interest rate of 2.875 percent is among the lowest in the region, encouraging locals to send money elsewhere to seek higher returns. Money management companies have opened more than 200 mutual funds catered for overseas investment and have $34 billion waiting to be remitted abroad, the central bank statement said.
Spurring Growth
The Philippine peso rose for a second day on speculation the central bank's decision yesterday to keep interest rates on hold will spur lending and growth.
Bangko Sentral ng Pilipinas left its tiered rates unchanged to encourage domestic banks to lend rather than place funds with the central bank. The peso is the second-best-performing currency in Asia this quarter as overseas investors' purchases of the nation's assets helped accelerate growth, pushing the benchmark stock index to a record.
The central bank yesterday kept the overnight rate at which it borrows from banks at 7.5 percent, which applies to the first 5 billion pesos ($108.3 million). For amounts more than that the central bank pays lower rates of 5.5 percent and 3.5 percent in its tiered system, which was introduced in November.
``The strong peso and lower interest rates brought by the tiering contributed to the first-quarter expansion,'' said Jonathan Ravelas, assistant vice president for economic research at Banco de Oro-EPCI Inc. in Manila. ``Expectations of higher growth this year are attracting investors into stocks.''
Above Estimates
The peso gained 0.4 percent to 46.075, the biggest gain since May 22, according to Tullett Prebon Plc, the world's second-largest inter-dealer broker. It appreciated 2.8 percent in May, rising for an 11th month, and by the most since July.
The currency traded near a 6 1/2-year high as the government reported gross domestic product growth of 6.9 percent for the first quarter, beating all estimates in a Bloomberg survey.
South Korea's won touched the highest in two weeks after stock purchases by overseas investors helped send the benchmark equity index to a record.
Strong Equity Inflows
The won rose to as high as 926.40 against the dollar as the Kospi index of stocks completed the best week since June 30. The economy grew for a 16th straight quarter, the Bank of Korea said today, and Vice Finance Minister Kim Seok Dong yesterday said the economy is showing signs of ``recovery.''
``We're seeing strong equity inflows into the region and the Korean won is going to benefit from that,'' said Steven Chang, global markets vice president at State Street Bank & Trust Co. based in Hong Kong. ``Korea is a turnaround story, given all the good news we've had on it and the good flows now coming through.''
The won finished the week little changed at 928.40, according to Seoul Money Brokerage Services Ltd. It may rise to 900 by the end of September, Chang said.
South Korea's currency earlier rose to the strongest since May 17 after the central bank report showed the economy grew 0.9 percent in the three months ended March 30 from the previous quarter, extending an expansion to the longest since the 17 quarters to December 1996. A Ministry of Commerce, Industry and Energy report today said exports climbed 11.9 percent in May from a year ago to a record.
Elsewhere in the region, the Malaysian ringgit fell 0.3 percent to 3.4008 on the week and the Vietnamese dong was down 0.1 percent to 16,088. The Thai baht rose 0.1 percent in the five-day period to 34.57 and the Singapore dollar was little changed at S$1.5301. Markets in Indonesia are closed today for a public holiday.
Atom Feed (xml)