Asian currencies gain on positive economic data

The Singapore dollar and the Chinese yuan gained among Asian currencies last week on signs the region\'s economic recovery is intact even as global financial markets turn volatile. International investors will add to holdings of Singapore bonds, the only economy in Southeast Asia with a top rating from Standard & Poor\'s, Moody\'s Investors Service and Fitch Ratings, Macquarie Group Ltd said in a research note on August 6. Malaysia\'s ringgit rebounded from a one-month low after data last week showed industrial production climbed unexpectedly in June. The yuan had its biggest weekly gain since 2007 after China\'s trade surplus widened in July. Article continues below Non-dollar assets \"Long-term diversification into non-dollar assets is a given although US Treasuries remain the deepest and most liquid market,\" said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. \"For China, the FX reserves accumulation is becoming an expensive affair and the only way to accumulate less is to allow for more yuan appreciation.\" The Singapore dollar advanced 0.6 per cent last week to S$1.2119 (Dh3.67) against its US counterpart, according to data compiled by Bloomberg. The yuan rallied 0.8 per cent to 6.3895, its biggest weekly gain since December 2007, while the ringgit appreciated 0.4 per cent to 3.0020, its third weekly gain in four. The number of applications for unemployment insurance payments in the US fell to 395,000 in the week ended August 5, the fewest since early April, the Labour Department said. \"The US data offers some breathing space for Asian currencies in a week that\'s rooted in fear,\" said Choong Yin Pheng, manager for economic and bond research at Hong Leong Bank Bhd. in Kuala Lumpur. \"Market sentiment remains fragile and this calm may be only temporary.\" S&P cut America\'s top rating by one level to AA+ on August 5, sparking a global stock-market selloff that wiped out about $7 trillion. ‘All necessary measures\' Policymakers of the Group of Seven nations vowed to take \"all necessary measures\" to support financial stability and the Federal Reserve pledged to retain its near-zero target rate for another two years on August 10. France, Spain, Italy and Belgium imposed a ban on short-selling on Friday to stabilise financial markets. The yuan strengthened beyond 6.40 per dollar for the first time since 1993. Consumer prices in China rose 6.5 per cent in July, the most in three years, while the nation\'s trade surplus widened 41 per cent to $31.5 billion, government reports showed.