Asia Currencies Gain, Led by Taiwan, as Fed Easing Spurs Inflows

Asian currencies strengthened, led by Taiwan’s dollar and Indonesia’s rupiah, as the Federal Reserve’s asset-purchase plan spurred inflows into the region’s higher-yielding assets.

International investors increased holdings of South Korean, Taiwanese and Indonesian stocks by $1.8 billion on Sept. 14, a day after the Fed announced it would expand holdings of long- term securities with open-ended buying of $40 billion of mortgage debt per month in a third round of quantitative easing. The MSCI Asia Pacific Excluding Japan Index (MXAPJ) of shares touched a four-month high today after advancing by 3.1 percent, the most this year, on Sept. 14.

“The QE3 is giving a boost to sentiment and expectations of capital inflows,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong. “The boost for the foreign-exchange rate from QE3 is likely to be temporary.”

via Bloomberg

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