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06:50 2007/09/30
Currencies gain on stocks buys
SINGAPORE: Asian currencies gained this quarter, led by the Philippine peso and the Singapore dollar, on speculation investors increased their holdings of emerging-market stocks and bonds.
India’s rupee made its biggest monthly advance since April and Malaysia’s ringgit rose to a two-month high on prospects the Federal Reserve will keep cutting interest rates. That may provide room for Asian central Banks to lower borrowing costs.
The Morgan Stanley Capital International Asia-Pacific Index of regional shares climbed 6.6% this quarter.
“Funds are buying back stocks and even bonds as the market bets the Fed may have to do more reductions and convince the central bank to cut as well,” said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. “The peso’s rally is happening at the backdrop of a weak dollar and strong inflows from investors and remittances.”
The peso rose 3.2% this month to 45.075 in Manila yesterday, its biggest monthly gain since July 2006, according to Tullet Prebon. The currency strengthened 2.5% this quarter, a fifth quarterly advance, the longest since June 1999 when Bloomberg began compiling the data.
Singapore’s dollar rose to the strongest in a decade on speculation investors were buying shares in the island’s benchmark Straits Times Index.
“Growth in Asia’s economies including Singapore’s are very robust,” said Dai Sato, manager of the Singapore treasury department at Mizuho Corporate Bank. “Investors are putting their money into assets here. The Singapore dollar may rise.”
The Singapore dollar climbed to S$1.4880, the highest since August 1997, before trading at $1.4894 on Friday from S$1.4922 on Thursday. It may advance to $1.4800 in coming days, Sato forecast.
Singapore’s currency strengthened against 15 of the 17 currencies of Asia’s largest economies this quarter as the Straits Times Index, rose 4.3% to a record.
The Indian rupee advanced 2.4% in the three months on optimism a rally in local stocks will spur investors to increase investment in the country. JPMorgan Chase & Co raised its forecast for the rupee, reversing its earlier call for weaker currency, on expectations Asia’s fourth-biggest economy will attract more overseas capital. The currency traded at 39.76 on Friday.
Elsewhere, the ringgit had a fourth quarterly gain, the longest streak since June 1995. It rose to 3.41 on Friday, the highest since July 25, before trading at 3.4125. South Korea’s won was rounded out the biggest monthly gain since April 2006. It strengthened 2.5% this month to 915.10.
Taiwan’s dollar snapped two months of losses, rising 1% this month to NT$32.667. The Thai baht headed for a ninth quarter of gains in onshore trading, the longest run since June 1981 when Bloomberg began compiling the data. It has risen 0.8% this quarter to 34.26. – Bloomberg
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