Asian currencies rose on Thursday as investors took heart from firmer stocks, but gains were capped by a spate of gloomy economic data that painted a bleak outlook for the export-dependent region. The Philippine peso climbed as high as 47.30 per dollar, up 0.5 percent from Wednesday's close as local stocks gained more than 1 percent, before pulling back to 47.35.
"Stocks are up and most regional currencies are strengthening against the US dollar," said a trader in Manila. "But the market is still wary - it's a basically buying on dips." The MSCI index of Asia-Pacific stocks outside Japan rose almost 1.5 percent as, following a rebound in US shares on Wednesday.
But the latest economic figures were bleak. China's economic growth slowed sharply in the fourth quarter, South Korea's economy suffered a big contraction and Japanese exports plunged a record 35 percent in December. The Singapore dollar rose as far as 1.4920 per US dollar, up 0.4 percent, as investors awaited for an expansionary budget to be announced by the government later on Thursday.
"Those long US dollars are cutting positions," said a Singapore-based trader. "I think it (the budget) will be more a booster jab for businesses and should help restrict the US dollar versus Singapore dollar." The Singapore dollar, which hit 1-1/2-month low on Wednesday, is still down 4 percent so far this month against the US dollar as the city state's economy sinks deeper into recession. Meanwhile, the high-yielding Indonesian rupiah gained almost 0.3 percent to 11,210 per dollar on foreign buying ahead of the central bank's debt sale.
"There are some fund inflows this morning," said a Jakarta-based trader, who also suspected Bank Indonesia, the central bank, was also in the market to support the rupiah. The central bank aims to raise 31 trillion rupiah ($2.77 billion) in an auction of debt paper (SBI) on Thursday. The rupiah has been underpinned in recent days by foreign interest in SBI, which offers 11 percent in a six-month tenor.
The Chinese yuan inched up to 6.8355 per dollar despite the weak growth numbers, as analysts believed authorities would maintain its policy of keeping the yuan basically stable in the near term. Ben Simpfendorfer, an economist at Royal Bank of Scotland, said he expected the People's Bank of China (PBOC) to cut interest rates by 108 basis points by the end of June.
"No change in the yuan in the first half of 2009, as the PBOC worries about the risks that a weaker currency spurs capital outflow, and recognises the limits to which a weaker currency can support exports," he said in a note. The South Korean won drifted lower to 1,376.6 per dollar as fears of an economic recession hurt investors' sentiment despite firmer local shares.