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|Asian Currencies: Taiwan Dollar Drops This Quarter on Low Yield|
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| Taiwan's dollar was set for a quarterly decline as overseas investors borrowed the currency, taking advantage of its lower interest rates to buy better- yielding assets elsewhere in the region. |
The currency, the second-worst performer this month among 15 Asia-Pacific currencies, also fell as local investors took money out of the island to seek higher returns. Taiwan's key interest rate, which the central bank yesterday raised to 2.875 percent, is 6.125 percentage points lower than that of Indonesia and 2.375 points less than in the U.S.
``The rate is still low in Taiwan even after yesterday's rate increase and that will continue to weigh on the currency,'' said Tetsuo Yoshikoshi, a market analyst at the treasury unit of Sumitomo Mitsui Banking Corp. in Singapore. ``The trend of funds moving out for higher yields will remain. The currency will be an underperformer in the region.''
The Taiwan dollar, little changed today, fell 0.3 percent this month to NT$33.073, taking a loss for the first three months of this year to 1.5 percent, according to Taipei Forex Inc. The currency may weaken to NT$34.20 by end-June, Yoshikoshi said.
The Philippine peso headed for a third quarterly gain on speculation overseas investors will increase the purchase of the nation's assets and Filipinos working abroad will bring more money back home.
The peso was set for a ninth straight month of advance as the central bank data today showed global fund managers bought $483.7 million more of the nation's stocks and bonds than they sold this year through March 16, compared with $422 million the same period last year. Remittances from Philippine nationals working abroad, which account for a 10th of the economy, will add 10 percent in 2007 after rising 19.4 percent in 2006, according to the bank's estimates.
``Growth expectations, high consumer confidence are driven by the remittances,'' said Estelito Biacora, vice president for treasury at Bank of Philippine Islands. ``We are seeing macro economic direction on the right track,'' supporting the peso.
The peso gained 0.8 percent in March to 48.21, taking the quarterly increase to 1.7 percent, according to data compiled by Bloomberg.
The Thai baht strengthened this month and this quarter on onshore market on speculation the nation's exporters are increasing demand for the local currency.
A central bank report at 2:30 p.m. in Bangkok will probably show January's current account surplus was $1 billion, according to a Bloomberg News survey. It would be the third straight month of an excess of $1 billion or more.
``Exporter demand has been the dominant factor in the onshore baht market and quite a big current account surplus is putting appreciation pressure on the baht,'' Sumitomo's Yoshikoshi said. ``The surplus tends to narrow in April to June period, so appreciation pressure will ease a bit in the next quarter.''
The baht climbed 1.3 percent on the month and 2 percent so far this year to 35.02, according to data compiled by Bloomberg.
Malaysia's ringgit is set for its second quarterly gain, up 2.1 percent to 3.4560 following a 4.5 percent gain in the previous three months.
``People perceive the ringgit to be undervalued,'' said Anuwar Idris, who helps manage about $93 million at Affin Fund Management in Kuala Lumpur. ``Foreigners are more positive on Malaysia as there's certainly a lot of feel-good factors now.''
South Korea's won was set to snap three months of losses as overseas investors returned to the nation's stocks after a global equities sell-off in February.
The currency has gained 1.2 percent from a four-month low March 5, while the Kospi share index has rebounded 5.6 percent. The won was still headed for a quarterly decline as a plunge in Chinese equities late last month spurred investors to cut holdings of emerging-market assets.
``The won's gain this month can be attributed to stock purchases,'' said Yuji Kameoka, senior economist and currency analyst at Daiwa Institute of Research in Tokyo.
The currency has gained 0.2 percent this month to 941, according to Seoul Money Brokerage Services Ltd. That helped trim its quarterly drop to 1.2 percent.
Elsewhere in Asia, the Indonesia's rupiah rose 0.1 percent this month to 9,121, according to data compiled by Bloomberg. The Singapore dollar rose 0.7 percent in March to S$1.5171. The Vietnamese dong was down 0.1 percent at 16,025.
By Yumi Teso
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