SINGAPORE/BANGKOK: Asian currencies will rebound this year led by India's rupee, the worst performer in 2011, said Oversea-Chinese Banking, the most-accurate forecaster for the region in the past six quarters.
The rupee will advance 5.1% to 50.5 per dollar by year-end followed by a 3.9% rally to 8,730 by Indonesia's rupiah, according to Singapore's second-largest bank. Barclays Capital, the second-best forecaster as measured by Bloomberg News, expects South Korea's won to outpace the other currencies, climbing 12% to 1,025. "We'll probably see more signs of a nascent recovery perhaps sometime into the second quarter," said Emmanuel Ng, a strategist at OCBC in Singapore. "You should see more structural foundation for capital inflows into Asia."
A recovering US economy and a shift in policy focus in China to bolster growth will support Asian currencies this year even as Europe struggles with its debt crisis, according to Barclays Capital, which predicts Malaysia's ringgit, the Thai baht, the rupee and the Taiwan dollar will rise more than 10% in 2012. ING Groep, the third-best forecaster, is less optimistic, expecting moves to range from a 4% gain in the rupee to a 0.4% decline in the rupiah.
OCBC ranked as the top forecaster with an average margin of error of 2.81%, compared with 3.01% for Barclays and 3.34% for ING.
US RECOVERY
The Bloomberg-JPMorgan Asia Dollar Index dropped 1.1% in 2011, halting two years of gains. The gauge lost 3.1% in the second half as the debt crisis prompted investors to pull funds from emerging-market assets. The rupee slumped 16% last year, followed by a 5% decline in the baht, and 3.5% losses for the won and the ringgit, according to data compiled by Bloomberg.
This year, India's currency has already gained 2.9%. Equity funds focused on Asia excluding Japan had redemptions of $24 billion in 2011 after attracting $22 billion the previous year, according to fund researcher EPFR Global. So far this year, overseas investors have pumped $2.4 billion into Taiwanese, South Korean and Indian shares, exchange data show.
Inflows into dedicated Emerging Asia Bond Funds slowed to $2.8 billion in 2011 from $6.84 billion in 2010, EPFR said. US data released this year showed December payroll growth beat forecasts, the unemployment rate dropped to the lowest level in almost three years and manufacturing rebounded.
Source : economictimes.indiatimes.com