Asian Currencies Strengthen as Global Recovery Continues

Posted February 03, 2010

Asian currencies generally strengthened as foreign investors are attracted to emerging markets in a resumption of risk taking. The US dollar rises as the economic numbers show a strengthening recovery. The yen weakened against the US dollar and the euro. Greece has submitted a 3-year budget deficit reduction to the European Union which is expected to be approved.


Asian currencies have been climbing in response to the improving US economy stirring hopes for increasing exports. The South Korean won rose to 1,153.40 against the US dollar.

The Philippine peso rose also to 46.318 pesos per US dollar.

Also rising was the Malaysian ringgit to 3.4140 ringgits per US dollar. The central bank of Malaysia voted to keep interest rates the same at 2 percent. The Taiwan dollar rose to NT$32.015.

Foreign investments have been rising in emerging markets as investors assume more risk once again by investing in emerging markets. US home sales rose by 1 percent in December leading to hopes that the recovery will steadily continue. In addition, Brazil’s industrial production increased by 18.9 percent in December 2009 compared to December 2008.

In the US job loss numbers are expected to be reported as being better than expected. Another bit of good news about the state of the US recovery was found in the rising index of non-manufacturing companies to 51 from 49.8. The index is reported by the Institute for Supply Management. 

The US dollar rose against the euro to $1.3965.

The yen weakened against the US dollar as dollar strength gained against most global currencies. The yen fell to 90.86 yen per US dollar. 

The yen also fell against the euro to 126.82 yen per euro.

Norway’s krone weakened against the euro to 8.1709 krone per euro after the central bank left the benchmark interest rate at 1.75 percent. The bank declined to raise the rate after it was raised twice during the fourth quarter of 2009.

The UK pound strengthened against the US dollar to $1.5973. The UK economy continues to improve restoring consumer confidence that the pace of the recovery will continue. Britain’s economy expanded in the fourth quarter of 2009 as the nation began the long haul out of the recession.

The UK’s policy of quantitative easing is probably going to allowed to end after the final asset purchase on 26-January-2010 in the amount of 200 billion pounds. The improving economy is also good news for the party in power because an election is scheduled for June. The UK consumer sentiment index rose to 73 in January compared to December.

The UK pound strengthened against the yen to 145.01 yen. 

Greece has supported a debt plan to the European Commission designed to make inroads on the nation’s debt problem. It is expected the 3-year plan will be accepted despite concerns the plans are not sustainable.

The European Union will probably have no choice but to provide financial assistance to Greece though the Commission has claimed it does not intend on bailing Greece out of its financial morass. Either the European Union or the International Monetary Fund will most likely provide the backing for Greece’s 3 year deficit reduction plan.

Greece’s plan includes freezing state wagess but that will not be enough to make significant inroads into the deficit. The European Union is concerned there is not a strong commitment on the part of Greece’s government to address the deficit and debt problems. Greece has failed to meet the terms of membership in European Commission putting the European Union’s ability to bring nations back into line to its first real test.

Spain is another European Union country with an unmanageable debt problem. The debt continues to grow despite warnings its credit rating is once again in jeopardy of being cut again.