Emerging Asian currencies got the week off to a firmer start on Monday, buoyed by encouraging Chinese economic data, while the Indonesian rupiah led the gains after the country's president pledged to open up investment opportunities. Second quarter gross domestic product data from China earlier in the day showed growth in the world's second-largest economy hit its weakest pace in at least 27 years, as demand at home and abroad cooled in the face of a bruising trade war with the United States.
While the GDP numbers met expectations, both June industrial output and retail sales beat forecasts in a sign of some stabilisation thanks to stepped-up stimulus from Beijing. "That (data) shows that the policy stimulus is making its way into the economy and helped offset the damage from the trade war," Sim Moh Siong, forex strategist at Bank of Singapore said. "Overall, the China growth is bumpy, but not faltering and that is a relief for the rest of Asia,' he added.
The yuan was slightly higher. The rupiah, the biggest mover in the region, strengthened to a more than five-month peak. The gains in the currency were underpinned by recently re-elected President Joko Widodo's promise of faster infrastructure development and more investment opportunities to create jobs and growth in Southeast Asia's biggest economy. "They are proposing opening up the foreign ownership and lowering corporate tax, they have also proposed changes to the strict labour laws, all these are positive indications that have helped the rupiah to strengthen," Sim said.
The rupiah also seemed to shrug off a narrower-than-expected trade surplus in June. Currencies of major oil importers, the Indian rupee and Philippine peso, firmed 0.2% and 0.1% as they benefited from a decline in oil prices. The Malaysian ringgit was at its highest since April 15, while the Thai baht edged higher. The baht lost about 0.8% last week, its biggest weekly drop since March after the central bank clamped down on speculative foreign inflows to temper rapid gains in Asia's best performing currency this year.