The Singapore dollar posted its biggest weekly gain in almost a decade after the central bank this week raised the trading range for its currency to help stem inflation near the fastest in 26 years.
The Singapore dollar rose to a record, leading gains among Asian currencies. Deutsche Bank AG and Goldman Sachs Group Inc raised their forecasts for the exchange rate after the Monetary Authority of Singapore’s unexpected move.
The Chinese yuan and Malaysian ringgit advanced to their strongest levels since both countries scrapped their dollar pegs in July 2005.
“Given the strong focus on inflation, there will probably be more upside to the Singapore dollar,” said Craig Chan, a currency strategist at Lehman Brothers Holdings Inc in Singapore. “It was a very aggressive policy decision relative to the economic backdrop.”
Singapore’s dollar finished the week at S$1.3586 per US dollar after reaching a record S$1.3553. The local currency has gained 1.9 percent this week, the most since the five days ended Oct. 16, 1998.
The Singapor dollar also rose after the trade ministry said on April 10 that the island’s economy expanded 7.2 percent in the first quarter from a year earlier, compared with 6 percent in the prior three months.
The New Taiwan dollar rose, resuming a rally this year as Asia’s best performing currency outside of Japan, on optimism improving ties with China will aid growth and spur fund inflows into the stock market.
Foreign investors turned net buyers of local stocks for a second day on Friday, helping the benchmark TAIEX to a 3.6 percent gain. Vice president-elect Vincent Siew (蕭萬長) met Chinese President Hu Jintao (胡錦濤) yesterday, the highest-level meeting between China and Taiwan, Siew’s spokesman Wang Yu-chi (王郁琦) said on Friday, without giving details.
The NT dollar rose to NT$30.319 from NT$30.402 a week ago, Taipei Forex Inc figures show. The week’s advance contributed to a 7 percent gain this year, following declines in 2006 and last year.
Taiwan’s debt rating outlook was on Friday raised to stable from negative by Standard and Poor’s because of diminishing risks of tension with China, the nation’s biggest overseas market.
The yuan posted a weekly advance, strengthening past 7 yuan to the US dollar after US Treasury Secretary Henry Paulson called for further appreciation as the US trade deficit unexpectedly widened in February. The G7 nations met in Washington yesterday.
The yuan rose 0.2 percent this week to 7.0030 per US dollar, the China Foreign Exchange Trade System said.
Its 4.3 percent advance this year is the best start to a year since its fixed-exchange rate to the dollar was abolished in July 2005.
Malaysia’s ringgit completed the best week in more than a year on speculation gains in regional currencies will allow the central bank to accept further appreciation to damp inflation.
The ringgit traded at 3.1517 per US dollar after reaching 3.1390, the highest level since October 1997, data compiled by Bloomberg show. It has gained 1.4 percent this week, the best since the five-days ended March 23 last year.
Elsewhere, the Philippine peso gained 0.4 percent in the week to 41.595, the Bankers Association of the Philippines said. Thailand’s baht rose 0.4 percent to 31.59 per US dollar. Indonesia’s rupiah advanced 0.5 percent to 9,183 to end two weeks of losses, while the South Korean won fell 0.2 percent to 975.75. Vietnam’s dong was little changed at 16,107 versus 16,110 a week ago.
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