Asian currencies advanced, paring weekly losses, after China’s central bank set the yuan’s rate at a record high, boosting the outlook for exports to the world’s second-biggest economy.
The Bloomberg-JPMorgan Asia Dollar Index snapped a three-day drop as the People’s Bank of China set the reference rate 0.18 percent stronger. China is the largest overseas market for Taiwan, Thailand and South Korea.
“If China’s policy is to boost domestic demand, ultimately the currency needs to appreciate,” said Nizam Idris, a Singapore-based strategist at Macquarie Group Ltd. “An appreciating currency boosts domestic purchasing power, which would be supportive of consumption.”
The ringgit gained 0.5 percent on Friday, the most in two weeks, to 3.0768 per US dollar in Kuala Lumpur, according to data compiled by Bloomberg. The Thai baht climbed 0.2 percent to 30.77 and the Philippine peso rose 0.2 percent to 42.963 against the greenback.
The Bloomberg-JPMorgan Asia Dollar Index extended losses for the week to 0.5 percent. The gauge’s 60-day historical volatility rose to 3.5 percent from 3.45 percent last week.
The yuan fell 0.1 percent on Friday and strengthened 0.2 percent this week to 6.3078 per US dollar. The currency gained 0.17 percent in the last 30 minutes of trading on Thursday, spurring speculation the monetary authority was buying the yuan.
“The fixing is such a surprise,” said Liu Dongliang, a senior analyst at China Merchants Bank (招商銀行), the nation’s sixth-biggest lender, in Shenzhen, China. “The central bank is probably trying to remind the market appreciation isn’t over yet.”
The New Taiwan dollar was steady on Friday and lost 0.1 percent this week to NT$29.585 per US dollar.
The ringgit pared its weekly decline to 0.5 percent. Malaysia’s GDP may rise 4 percent to 5 percent this year, Bank Negara Malaysia said on Wednesday, lower than a prediction of 5 percent to 6 percent the finance ministry made in October and an increase of 5.1 percent last year.
The baht fell 0.1 percent during the week. Global funds poured a net US$834 million into local equities this month through Thursday, according to exchange data. The Thai economy is forecast to expand 5.7 percent this year, compared with a previous estimate of 4.9 percent, central bank Assistant Governor Paiboon Kittisrikangwan said on Wednesday.
The Philippine peso advanced after Philippine Finance Secretary Cesar Purisima said he was confident that a credit rating upgrade from Standard and Poor’s may come sooner than later, he said in a briefing in Manila on Friday.
Elsewhere, the South Korean won fell 0.4 percent on Friday and 0.9 percent this week to 1,135.35 per US dollar.
India’s rupee fell 2 percent this week through Thursday to 51.22. The nation’s currency markets were closed for a public holiday yesterday.
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