Most emerging Asian currencies rose on Friday to see weekly gains against the dollar and multi-year highs versus the euro as investors chased higher yields after the European Central Bank unveiled a massive monetary stimulus programme. The Philippine peso advanced as much as 0.5 percent to 44.12 per dollar, its strongest since September 17, on portfolio inflows. The Taiwan dollar touched its strongest in more than five weeks on foreign demand.
Indonesia's rupiah hit a three-week peak against the dollar as foreign demand powered Jakarta shares to a record high. The ECB said on Thursday it would buy debt from March until the end of September 2016, which would pump billions of euros into the zone's economies. "Asia FX could be supported. Search for yield flows seems to be coming on stream," said Saktiandi Supaat, head of FX research for Maybank in Singapore.
The rupiah and the peso would benefit more from carry trades and even Malaysia's ringgit is expected to find support, he said. The peso has gained 1.2 percent against the dollar so far this week, leading the gains among emerging Asian currencies, according to Thomson Reuters data. The Philippine currency has been enjoying flows into local stocks and bonds.
Taiwan's dollar has appreciated 1.1 percent on the week. The rupiah has risen 0.9 percent thanks to foreign demand for Indonesia's financial assets, while India's rupee was up 0.7 percent. Not all emerging Asian currencies have risen. The Malaysian ringgit has fallen 1.3 percent so far this week on concern that sliding oil prices may hurt the country's current account surplus and worsen its fiscal deficit.
Singapore's dollar has lost 1.0 percent as investors shunned the city-state's low yields. The South Korean won has slid 0.6 percent as growth in Asia's fourth-largest economy slowed sharply in the fourth quarter. Foreign exchange authorities were spotted intervening to limit its appreciation, especially against the yen. The Taiwan dollar rose as much as 0.7 percent to 31.300 per US dollar, its strongest since December 17. The central bank has not been spotted aggressively buying the greenback to stem the Taiwan dollar's appreciation, causing speculation the authorities may tolerate more volatility, traders said.
The Taiwan dollar is expected to strengthen further as exporters are likely to buy it for settlements before the Lunar New Year holidays in February, traders said. The rupiah gained as much as 0.7 percent to 12,400 per dollar, its strongest since January 2. Jakarta shares rose more than 1 percent to a record high. The ten-year government bond yield fell to 7.120 percent, its lowest since October 29, 2013. Other government bond yields also fell.
The Indonesian currency pared some of its gains as traders booked profits, seeing a chart resistance around the session high. The currency has a 55-day moving average at 12,405. It has been closing daily sessions weaker than the average since early September 2014. The rupiah in non-deliverable forwards markets weakened, reflecting the dollar's broad strength.
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