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Monday, May 9, 2011

Asian currencies outlook may 9 2011, Singapore Dollar, Malaysian Ringgit, Philippine Peso

Asian currencies outlook may 9 2011, Singapore Dollar, Malaysian Ringgit, Philippine Peso : The Singapore dollar led gains in other Asian currencies yesterday, with investors taking higher commodity prices as a green light to rebuild bets on regional emerging currencies, which may keep strengthening especially against the euro.

The Malaysian ringgit, the South Korean won and the Singapore dollar had major reversals higher against the euro late last week after hitting technical support, indicating they have more rooms to rise further versus the euro.

Stretched positioning and worries about Europe’s debt problems may keep investors selling the euro against the emerging Asian currencies, whose longer-term economic fundamentals are generally stronger then developed markets, analysts said.

“This is our strong mid-term view, as AXJ will rise against the dollar a bit but euro/dollar is going down this year. So it’s better to fund long Asian FX with the euro,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.

He said the won, the Philippine peso and the Chinese yuan would be good to buy against the euro.

“The Korean won and Philippine peso remain relatively undervalued compared to other regional currencies when compared to pre-global financial crisis levels, and they will be supported by solid growth and rate hikes. The yuan will be allowed to rise relatively fast to curb imported inflation,” Mr. Kowalczyk added.

Peso gains

The peso gained 15 centavos to settle at P42.93 per dollar yesterday.

Analysts said market players’ risk appetite improved on US labor data and as oil recovered in the global market.

“After a stronger than expected US nonfarm payrolls data, market players regained their confidence and considered it as a manifestation of growth for the world’s largest economy,” a trader said in a phone interview yesterday.

The US Labor department on Friday reported that employers added 244,000 jobs in April.

“Due to this positive news from the US and no negative news in the country, market players regained their confidence to invest in the country’s assets again,” the trader added.

The Philippine Stock Exchange index rebounded by 0.9% or 38.08 points to close at 4,257.15 yesterday after suffering a four-day decline last week.

Rizal Commercial Banking Corp. Senior Vice-President Marcelo E. Ayes in an interview said oil’s recovery yesterday brought the dollar down across most currencies.

“The oil was priced at $99 a barrel [yesterday] higher than its $97 a barrel price last Friday,” he said. The US dollar and commodity prices have an inverse relationship.

Dollars traded yesterday amounted to $781.7 million, down from the $1.19 billion traded last Friday.

Strategy

Emerging Asian currencies have attracted foreign fund flows on stronger economic recovery and policymakers’ efforts to fight inflation as well as amid ample liquidity.

Many dealers have not spotted big flows linked to such cross-flows yet, but Andy Ji, Asian currency strategist and economist with Commonwealth Bank of Australia in Singapore, thinks short euro/emerging Asian FX is a good way to be positioned in the near term.

“We think the USD to strengthen further especially if the retail trade out the US is strong. We also expect the risk sentiment to recover somewhat on a benign mix of growth/inflation data out of China this week,” he said. For the latest updates PRESS CTR + D or visit Stock Market news Today

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