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Indian Rupee Leads Asian Currencies Higher, as Rupiah Rises on Fitch Upgrade
Jiyeun Lee | December 18, 2011

Indonesia’s rupiah gained 0.6 percent to 9,035 and was up 0.5 percent for the week after the upgrade, which was announced late on Thursday. The currency advanced as much as 0.9 percent earlier, touching a one-week high. (Agency Photo) Indonesia’s rupiah gained 0.6 percent to 9,035 and was up 0.5 percent for the week after the upgrade, which was announced late on Thursday. The currency advanced as much as 0.9 percent earlier, touching a one-week high. (Agency Photo)
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Asian currencies strengthened, paring weekly declines, after a government report showed US jobless claims fell to the lowest level since 2008, buoying the region’s export outlook.

India’s rupee led gains as the Bloomberg-JPMorgan Asia Dollar Index rose 0.4 percent on Friday, trimming the week’s drop to 0.4 percent. The number of applications for unemployment payments in the United States dropped to 366,000 in the week ended Dec. 10, lower than was forecast by any of 47 economists surveyed by Bloomberg. India announced measures to curb speculation in the currency market, while Fitch Ratings upgraded Indonesia’s credit ranking to investment grade of BBB-.

The rupee jumped 1.7 percent to 52.7450 per dollar in Mumbai, the biggest gain since May 2010, according to data compiled by Bloomberg. It strengthened as much as 2.7 percent on Friday after the Reserve Bank of India said companies can’t enter into multiple forward contracts to cover a single overseas transaction. The rupee pared gains as the monetary authority, which has raised interest rates 13 times since the start of 2010 to cool inflation, kept them unchanged at a policy review in Mumbai.

“The RBI has taken decisive measures to reduce onshore speculation against the rupee,” said Olivier Desbarres, head of foreign-exchange strategy for Asia-Pacific ex-Japan at Barclays Capital in Singapore. “These measures have certainly caught the market’s attention and it reduces the chances of a rapid weakening of the rupee.”

Indonesia’s rupiah gained 0.6 percent to 9,035 and was up 0.5 percent for the week after the upgrade, which was announced late on Thursday. The currency advanced as much as 0.9 percent earlier, touching a one-week high.

“The country will now attract a broader range of investors, giving the government and corporates more funding sources,” said Enrico Tanuwidjaja, a currency strategist at Malayan Banking in Singapore. It should make the rupiah stronger, he said.

The Philippine peso rose 0.7 percent to 43.830, paring last week’s loss to 0.5 percent. China’s yuan climbed 0.4 percent to 6.3484 and was up 0.3 percent for the week. The South Korean won strengthened 0.4 percent to 1,158.73, trimming its weekly drop to 1 percent.

The MSCI Asia-Pacific Index of stocks gained 0.8 percent on Friday and was down 2.4 percent for the week. Christine Lagarde, the managing director of the International Monetary Fund, said on Thursday that Europe’s debt crisis is growing to the point where it won’t be solved by one group of countries.

Elsewhere, Malaysia’s ringgit advanced 0.4 percent on Friday to 3.1778 per dollar and was down 0.8 percent for the week.

Taiwan’s dollar was little changed at 30.369 and dropped 0.4 percent this week. Thailand’s baht was up 0.1 percent at 31.34 and declined 1.3 percent this week.

Bloomberg