Asian Currencies Climb on Fund Inflows, Global Dollar Weakness

Asian currencies rose, led by the Taiwan dollar and Malaysia’s ringgit, as reports signaled the outlook for regional exports and inflows of foreign exchange is improving. Taiwan’s dollar climbed to a five-month high as the island’s current account swelled to a record surplus. The ringgit advanced to the strongest level in a week after gross domestic product in Singapore, Malaysia’s biggest trading partner, shrank less than initially estimated last quarter. The ICE Dollar Index fell to its lowest level this year as the Federal Reserve said it may increase asset purchases, boosting supply of the currency. Taiwan’s currency rose 0.4 percent to NT$32.738 per dollar as of 4 p.m. in Taipei, according to Taipei Forex Inc. It touched NT$32.606, the strongest since Dec. 22. The ringgit gained 0.5 percent to 3.5185, and reached 3.5180, the highest level since May 13. The Dollar Index, which tracks the greenback against the euro, yen, British pound, Canadian dollar, Swiss franc and Swedish krona, dropped for a fourth day to 81.03. It declined to the year’s low of 80.91 yesterday.

‘Easing Off’
Singapore’s GDP fell an annualized 14.6 percent last quarter from the previous three months, after shrinking 16.4 percent between October and December, the trade ministry said in a statement today. The first-quarter contraction was better than an April 14 estimate of a 19.7 percent drop.

The dollar weakened against 13 of the world’s 16 major currencies on concern the U.S. central bank will supply more of the currency to help end a recession in the world’s biggest economy. The yen rose to 94.63 per dollar in Tokyo after touching 94.29, the highest level since March 20, from 94.88 yesterday in New York. The euro traded at $1.3818 from $1.3780 yesterday, when it reached $1.3830, the strongest level since Jan. 5.

‘Overweight’ Emerging Markets
The MSCI Asia Pacific Index of regional shares and the MSCI Emerging-Markets Index fell today following yesterday’s highest closing levels since October. A net 46 percent of the 220 fund managers surveyed by Merrill Lynch & Co. in May said they were “overweight” emerging-market equities, up from 4 percent two months ago and the highest level since mid-2007. South Korea’s won rose as overseas investors bought more of the nation’s shares than they sold for a fifth day, exchange data showed. The currency climbed 0.2 percent to 1,248.67, taking gains in the past three months to 21 percent, Asia’s best performance.

Taiwan Trade
Taiwan’s dollar climbed for a third day after the island’s current-account surplus widened to $13 billion in the first quarter as imports plunged, according to a report yesterday after local markets closed. Investors abroad bought more Taiwan shares than they sold for a second day, exchange data shows. Taiwan’s dollar is likely to be one of Asia’s “top- performing” currencies in the second half of this year, thanks in part to improving ties with China, according to Societe Generale SA. Investors should buy the currency against the ringgit to profit from this, Patrick Bennett, a Hong Kong-based currency and rates strategist at Societe, wrote in a note today. Elsewhere, the Philippine peso rose 0.1 percent to 47.23 per dollar and the Thai baht added 0.2 percent to 34.39. Singapore’s dollar climbed 0.4 percent to $1.4557 and China’s yuan was little changed at 6.8241. Indonesia’s markets are closed for a public holiday, closed at 10,320 per dollar on Wednesday (20/05).