Asian currencies had their biggest weekly gain in almost two months as reports showed regional economies are improving and concern faded that Europe’s debt crisis will worsen.
The South Korean won and the Philippine peso were the biggest gainers on Friday after China affirmed its commitment to investing in Europe. The Philippine economy grew at the fastest pace in three years in the first quarter and South Korean manufacturers’ confidence held near a seven-year high.
The peso gained 0.6 percent in the past week to 46.192 per US dollar in Manila, according to Tullett Prebon PLC.
“Markets are thinking they may have overpriced risks related to Europe,” said Sebastien Barbe, head of emerging-market research for Credit Agricole CIB in Hong Kong. The idea that the European crisis could derail the global recovery eased and “if this is the case, then there’s no reason to sell stocks and currencies in Asia.”
The won rose 2.4 percent to 1,194.80 on Friday, leaving it little changed for the week, based on Seoul Money Brokerages Services prices. Markets in Indonesia, Malaysia, Singapore and Thailand were shut for a holiday on Friday.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, rose 0.5 percent in the week, its most since the five days ended April 9.
The New Taiwan dollar climbed 0.2 percent to NT$31.175 this week, according to Taipei Forex Inc.
The NT dollar erased earlier gains in the final minutes of trading as the central bank bought dollars to damp this week’s appreciation, according to two traders who declined to be identified.
The currency and stocks gained this week and five-year bonds declined as China’s commitment to investing in Europe allayed concern the region’s debt crisis will halt the recovery from a global recession. Concern about the crisis and tensions on the Korean peninsula helped drive the NT dollar and the TAIEX index of shares to their lowest levels of the year this week.
The NT dollar rose as much as 0.7 percent to NT$31.948 against its US counterpart, before closing at NT$32.175, little changed from Thursday, according to Taipei Forex Inc.
Policymakers have sold the NT dollar most days in the past month to slow gains, according to traders familiar with the central bank’s operations who declined to be identified.
Central banks intervene in the markets by arranging purchases or sales of foreign exchange. Taiwan’s currency reserves climbed 17 percent in the past year to US$357 billion, as policy makers curbed a decline in the greenback to help exporters compete.
Elsewhere, the Indonesian rupiah strengthened 0.7 percent in the week to 9,215 per US dollar, the Malaysian ringgit climbed 0.9 percent to 3.2865 and the Thai baht fell 0.3 percent to 32.54.
The euro declined, headed for a sixth monthly loss against the US dollar, amid concerns European measures to reduce fiscal deficits and contain the region’s sovereign debt crisis will undermine the global recovery.
The 16-nation currency erased last week’s gain against the greenback as Fitch Ratings on Friday stripped Spain of its AAA credit grade, saying the nation’s debt burden is likely to weigh on economic growth.
The euro declined 2.4 percent this week to US$1.2273 from US$1.2570 on May 21, after gaining 1.7 percent. The common currency has declined 7.7 percent this month, and is on track for the longest monthly losing streak since April 2000. It fell 1.2 percent over the past five days to ¥111.77, from ¥113.13. The US dollar gained 1.2 percent against the yen to ¥91.93, from ¥90.
The pound climbed against the euro and bonds fell as data showed the UK economy grew by more than previously estimated in the first quarter, fueling speculation the recovery is taking hold.
The pound strengthened 2.1 percent in the week to £0.8508 per euro as of 5:55pm in London on Friday. It was little changed in the seven days at US$1.4479. Government bonds declined, pushing the 10-year yield two basis points higher to 3.58 percent.
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