Currencies in Asia Strengthened this Week
This week, Asian currencies posted better performance amid speculation that borrowing costs will be continuously increased by central banks for each region in order to control inflation. The Singaporean dollar posted a record while a 13-year high was attained by the ringgit of Malaysia.
The highest level for the Bloomberg-JP Morgan Asia Dollar index was attained since 1997 due to the combined $1.7 billion stocks contributed by foreign investors. In April 20, interest rates were hiked up by the Bank of Thailand. This is the sixth times the bank made this move in a year. On that day, Malaysia reported the rise of consumer prices by 3% in March from an earlier year.
Suresh Kumar Ramanathan, CIMB Investment Bank Bhd strategist for foreign exchange, mentioned that the potential of an increase in rate is lifted by inflation pressure that backs the ringgit. He added that the funding costs of the U.S. dollar is still not enough and it is likely for investors to go long currencies in Asia.
A gain of 1% was attained by the Singaporean dollar to S$1.2333 for the week against the U.S. dollar. The currency touched S$1.2329, which is considered the most solid level since it’s attainment in 1981. The Malaysia ringgit increased 0.6% to 3.00485 in the capital city of Kuala Lumpur and touched 3.0034. This had been the highest that the Malaysian currency attained since October of 2007.
In addition, currencies in Asia gained following the rise in earnings at companies that include Apple Inc. which strengthened confidence in the worldwide economic recovery and spending in the U.S.
iPhone maker Apple cited that its profit for the second quarter had almost gone twice. Seventy-five percent of the 76 companies in the Standard and Poor’s 500 Index have exceeded expectations for per-share profit.
Meanwhile, a decline of 0.1% was posted by the won to 1,080.80 per dollar amid speculation on the intervention of the central bank to control appreciation. In April 21, gains stopped at 1,078.30.
Byeon Ji Young, a Woori Futures Co. analyst, notes that the potential of the won to benefit due to advanced earnings and worldwide economic outlook enhanced investment into assets that could be of higher risks. He also cited that gains could even be furthered by issues regarding the possible interference of authorities to curb the appreciation of the won.
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