Asian Currencies Climb This Week on Efforts to Revive Economies

By Kim Kyoungwha and Lilian Karunungan

Feb. 7 (Bloomberg) -- An Asian currency gauge rose for a second week as policy makers stepped up efforts to revive economies reeling from the global recession, raising speculation overseas investors are returning to emerging markets.

Malaysia is prepared to take “radical” steps to boost the economy, the government said on Feb. 5, while Indonesia a day earlier cut interest rates for a third straight month. Taiwan will offer tax breaks and subsidized loans to lure local investors back from China, which is increasing export tax rebates for textiles. U.S. President Barack Obama urged lawmakers on Feb. 5 to pass his economic stimulus plan or face “catastrophe.”

The Philippine peso capped the biggest weekly advance in a month. India’s rupee had a second week of gains and Malaysia’s ringgit traded at a one-week high as regional stocks rallied.

“It’s a reversal of risk aversion,” said Vishnu Varathan, a regional economist at Forecast Singapore Pte. The peso “is moving in line with regional currencies on hopes Obama’s plan is making its way with less impediments.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, rose 0.4 percent for the week to 105.10. The peso climbed 0.5 percent yesterday to 47.202 per dollar, a weekly gain of 0.4 percent. India’s rupee advanced 0.3 percent this week to 48.7250 versus the U.S. currency.

Malaysia, U.S. Stimulus

A U.S. Treasury official this week said Secretary Timothy Geithner will make a speech on Feb. 9 and Obama will hold a news conference that will address the financial recovery plan.

The MSCI Asia Pacific Index of regional shares rose 1.2 percent. The gauge has fallen 6.9 percent in 2009, extending last year’s record 43 percent tumble, as the credit crisis dragged the world’s biggest economies into recession.

Malaysia’s second stimulus plan, to be announced soon, will be much bigger than November’s 7 billion ringgit ($1.9 billion) package, state news service Bernama reported late on Feb. 5, citing Finance Minister Najib Razak.

“You’ve seen a little bit of sentiment shift in the market,” said Magnus Prim, chief Asia strategist at Skandinaviska Enskilda Banken in Singapore. “We’re still bearish on the ringgit so we think the strength we’re seeing now will prove temporary. We think there would be more negative news coming out of the economic front.”

The ringgit rose 0.3 percent to 3.6017 per dollar, gaining 0.2 percent on the week.

U.S. Jobless

The U.S. dollar fell versus the yen on concern a government report would show the jobless rate rose to a 16-year high, which it did, rising to 7.6 percent. The currency declined to 90.89 yen from 91.23 yen late in New York on Feb. 5. Against the euro, it traded at $1.2786 from $1.2790.

Taiwan, China, Malaysia and the Philippines will all issue data on exports next week, with economists surveyed by Bloomberg News forecasting contractions in each nation. The Bank of Korea also meets on interest rates.

Taiwan’s dollar declined this week on speculation falling exports and the slowing economy will deter overseas investors.

Economists are expecting overseas sales from Taiwan slid 48 percent in January, following a 42 percent decline a month earlier, according to a Bloomberg survey before the trade report on Feb. 9.

Taiwan Dollar, Exports

The central bank may seek to weaken its currency to help exports, according to AU Optronics Corp., the world’s third- biggest producer of liquid-crystal displays.

The bank “may encourage the currency to go downwards against the U.S. dollar in order to keep the competitiveness of our exports compared to Korea,” Andy Yang, a finance director who will take over as AU Optronics’s chief financial officer next month, said yesterday in an interview from Hsinchu, Taiwan.

The island’s dollar fell 0.5 percent this week to NT$33.750 from NT$33.57 on Jan. 23, when local markets closed for the week-long Lunar New Year holiday, according to Taipei Forex Inc.

Korea’s government may have to cut its economic growth forecast of 3 percent for 2009 as the economy is deteriorating faster than expected, incoming Finance Minister Yoon Jeung Hyun said yesterday.

The Korean currency rose 0.1 percent to 1,383.80 per dollar, paring this week’s loss to 0.3 percent, as global funds bought more local shares than they sold for an eighth day, the longest run of net purchases since April 2007.

Won, Yuan

“The won should be more fundamentally stable going forward,” said Stewart Newnham, a strategist with Morgan Stanley in Hong Kong. “We are still encouraged that trade is generally heading in the right direction. Financial flows are normalizing rapidly.”

Yuan forwards due in a year rose 2.4 percent this week, the most since March 1999, as China said it wants to maintain a stable currency to limit the impact of the global financial crisis. The contracts indicated China’s currency will weaken 1.1 percent to 6.9110 a dollar in a year. The Chinese yuan was little changed at 6.8360 from a week ago.

Elsewhere, the Indonesian rupiah rose 0.3 percent to 11,720 today, paring this week’s decline to 2.4 percent. The Thai baht fell 0.2 percent on the week to 35 per dollar and Vietnam’s dong was little changed at 17,485.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

Read more...

Asian Stocks Rise Second Week Amid Government Policy Optimism

By Darren Boey

Feb. 7 (Bloomberg) -- Asian stocks rose for a second week as optimism that government measures worldwide will ease the financial crisis offset cuts in earnings forecasts at Mizuho Financial Group Inc. and Hitachi Ltd.

BHP Billiton Ltd. and Kawasaki Kisen Kaisha Ltd. led gains among mining and shipping companies after China cut some tariffs on raw material and component imports. Mitsubishi UFJ Financial Group Inc. led banks lower as rival Mizuho, Japan’s second- largest lender, cut its earnings target. Hitachi, which makes electrical equipment, slumped 6.5 percent after forecasting the biggest loss by an Asian electronics maker.

“Fiscal and monetary stimulus policies have helped improve sentiment,” said Binay Chandgothia, who oversees about $1.5 billion as chief investment officer at Principal Asset Management Co. in Hong Kong. “These measures will benefit the economy although there will be more earnings downgrades.”

The MSCI Asia Pacific Index rose 0.4 percent to 83.42 in the past five days, adding to the previous week’s 3.5 percent increase. The gauge is down 6.9 percent in 2009 amid mounting signs the global recession has hurt corporate profits.

Toyota Motor Corp., the world’s largest automaker, yesterday widened its loss prediction on slowing demand in the U.S. and in Japan. Mitsubishi UFJ cut its full-year profit forecast after the stock market closed yesterday.

The Nikkei 225 Stock Average added 1 percent last week, while Hong Kong’s Hang Seng index climbed 2.8 percent. China’s Shanghai Composite Index surged 9.6 percent.

Government Action

Stocks have fallen this year amid mounting signs the financial crisis, which has caused more than $1 trillion in credit-related losses, is hurting corporate earnings. With banks tightening lending, bankruptcies among Japan’s listed companies reached an annual postwar record last year, according to Tokyo Shoko Research Ltd.

Governments around the world are stepping up efforts to ease the crisis that the International Monetary Fund predicts will cause global growth to almost grind to a halt this year. A U.S. Treasury official said this week that Secretary Timothy Geithner will make a speech Feb. 9 and President Barack Obama will hold a news conference that will address a stimulus package.

Indonesia’s central bank this week lowered its benchmark interest rate for a third straight month. China’s government started investing a second allocation of a 4 trillion yuan ($580 billion) economic stimulus package, the official Xinhua News Agency reported.

China’s State Council, or Cabinet, also this week said that components and raw materials that “really needed to be imported” will be exempted from import duties.

Baltic Dry

BHP, which gets about 20 percent of its revenue in China, climbed 5.7 percent to A$32.23 on speculation sales to Asia’s second-largest economy will revive. China Mobile, the world’s No. 1 wireless-phone company by users, gained 7.7 percent in Hong Kong to HK$75.90.

Kawasaki Kisen Kaisha, Japan’s No. 3 shipping line, soared 20 percent in the week to 401 yen. Mitsui O.S.K. Lines Ltd., operator of Japan’s largest fleet of iron-ore ships, jumped 19 percent to 629 yen. STX Pan Ocean Co., South Korea’s biggest bulk carrier, surged 17 percent to 11,900 won.

The Baltic Dry Index of prices for shipping commodities soared 15 percent on Feb. 4, the most since at least 1985. The measure climbed in the week amid speculation iron-ore shipments to China will increase.

Mitsubishi UFJ slumped 5.9 percent to 480 yen. The company cut its full-year profit forecast by 77 percent on rising bad loans and soured stock holdings. Japanese banks and insurers accounted for 57 percent of the $31.1 billion of credit-related losses declared by Asian financial companies, data compiled by Bloomberg show.

Hitachi, Toyota

Mizuho lost 0.4 percent to 226 yen. The company turned to a 145.1 billion yen loss in the three months ended Dec. 31 from a 66 billion yen profit a year earlier.

Hitachi slumped 6.5 percent to 275 yen after forecasting a record 700 billion yen ($7.8 billion) loss in the year ending March 31 amid slumping demand.

Toyota, which also lost its top rating from Moody’s Investors Service in the week, ended the week 5.6 percent higher at 3,090 yen. The company said its operating loss in the year ending March may total 450 billion yen ($4.95 billion) compared with company’s previous estimate of a 150 billion yen shortfall.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

Read more...