Asian Currencies Advance for Third Week on Fed Stimulus Optimism

Asian currencies had a third weekly gain, led by South Korea’s won, on optimism the Federal Reserve will delay any reduction in stimulus after a budget impasse threatened the world’s largest economy.

The Bloomberg-JPMorgan Asia Dollar Index extended its advance from Oct. 11 to 0.4 percent after U.S. President Barack Obama signed legislation this week that ended a 16-day partial government shutdown and deferred funding and debt ceiling deadlines into 2014. The “fiscal shenanigans” undermined the case for tapering the Fed’s $85 billion in monthly bond buying, Dallas Fed President Richard Fisher said Oct. 17.

“The removal of the U.S. default risk added to improving risk sentiment,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. Speculation the Fed “will not rush to reduce stimulus already gave some underlying support to emerging-market assets,” he said.

The won strengthened 1 percent in the last five days to 1,060.84 per dollar in Seoul, according to prices compiled by Bloomberg. Thailand’s baht gained 0.8 percent to 31.06, Malaysia’s ringgit climbed 0.7 percent to 3.1561, while Indonesia’s rupiah rose 0.4 percent to 11,323. The yuan gained 0.39 percent to 6.0968, its best week in a year.

Global funds bought $2.3 billion more South Korean, Taiwanese, Thai and Philippine stocks than they sold this week, exchange data show.