Azernews.Az

By Bloomberg

Asian currencies headed for the biggest weekly rally in more than two years as a recovery in oil prices and a further round of monetary easing boosted sentiment in emerging markets.

Nineteen of the 24 developing-nation currencies tracked by Bloomberg gained this week as oil climbed almost 6 percent, adding to a similar advance in the previous five days. China lowered banks’ reserve requirements after November’s surprise interest-rate cut, joining central banks from India to Canada to Singapore in adjusting policy this year to spur growth. The European Central Bank began purchasing market assets in January just as the U.S. is set to tighten.

“There was some recovery in oil prices, which was supportive of emerging markets,” said Nizam Idris, Singapore- based head of foreign-exchange and fixed-income strategy at Macquarie Bank Ltd. China’s easing “may have impacted sentiment positively,” he said.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the 10 most-active currencies excluding the yen, rose 0.7 percent as of 11:54 a.m. in Singapore. It’s set for the biggest five-day advance since September 2012.

The People’s Bank of China cut the reserve-requirement ratio by 0.5 percentage point effective Thursday after the world’s second-biggest economy posted the slowest annual growth since 1990 last year. The easing will inject as much as 600 billion yuan ($96 billion) to the banking system, Australia & New Zealand Banking Group Ltd. economists estimate.

Yuan Gains

China’s currency climbed to a two-week high Friday after the central bank raised the yuan’s daily fixing by 0.17 percent to 6.1261 a dollar. The yuan is still down for the year, after losing 2.4 percent in 2014.

“For China, they don’t want people to think the yuan will drop too much,” said Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. “A stable fixing means you can’t depreciate a lot.”

Malaysia’s ringgit led gains this week as it’s the most likely beneficiary from the oil-price rally, given the nation is Asia’s only major exporter of the fuel. The currency climbed 2.3 percent, while Thailand’s baht rose 0.6 percent and the South Korean won appreciated 0.5 percent.

The Malaysian government last month raised its budget- deficit target and cut its estimate for the economy’s expansion for 2015 amid a 49 percent slide in Brent crude since June. Trade data this week that beat economists’ estimates also helped bolster the ringgit.

“The ringgit has rallied on the back of a recovery in oil prices,” said Khoon Goh, a strategist at Australia & New Zealand Banking in Singapore. “There’s reduced concern over external balances after a better-than-expected trade surplus number.”

Elsewhere in Asia this week, Taiwan’s dollar climbed 0.5 percent and Indonesia’s rupiah rose 0.4 percent. The Indian rupee and China’s yuan both added 0.2 percent. The Philippine peso fell 0.2 percent and Vietnam’s dong lost 0.1 percent.