Asian Currencies Climb as Stocks Rally; Won, Rupiah Lead Gains

Asian currencies advanced, led by South Korea’s won and Indonesia’s rupiah, as a surge in regional stocks this month added to speculation investors are returning to emerging markets.

Eight of the 10 most-active Asian currencies outside Japan gained as U.S. interest rates as low as zero may prompt global investors to buy higher-yielding assets. The won, Asia’s worst performer this year, rose to a six-week high as overseas funds bought 533 billion won ($412 million) more Korean shares than they sold so far in December. The rupiah climbed to the highest level in almost seven weeks.

“Asia seems to be attracting an uptick in equity flows,” said Dwyfor Evans, a strategist with State Street Global Markets in Hong Kong. “There’s just a lot of cheap money out there at the moment.”

The won gained 2.2 percent to 1,295.75 per dollar as of 12:54 p.m. local time, according to Seoul Money Brokerage Services Ltd. It touched 1,288.95, the strongest since Nov. 5. The Indonesian currency added 1.3 percent to 10,887. The Malaysian ringgit rose 1.3 percent to 3.4837 per dollar.

Asian stocks rose for a second day after the Federal Reserve said on Dec. 16 it will use “all available tools” to help resume growth in the world’s biggest economy. The Fed said it will target a federal funds rate of between zero and 0.25 percent.

The MSCI Asia Pacific Index of regional shares is up 9.8 percent in December, headed for its biggest monthly gain since June 1999. The last time the index ended a month higher was in April this year.

‘Yen Intervention’

The yen fell from near a 13-year high against the dollar after Japanese Finance Minister Shoichi Nakagawa said the government is ready to take action in the foreign-exchange market if needed. The Japanese currency also declined toward a five-week low versus the euro on speculation Japan will sell its currency to protect overseas earnings of its exporters.

“We are at such low levels now that yen intervention becomes a possibility,” said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo.

Japan’s currency fell to 87.55 per dollar in Tokyo from 87.24 yen late yesterday in New York, when it rose to 87.14, the highest level since July 1995. Against the euro, it dropped to 126.31 from 125.80 yesterday. The yen may decline to 88 per dollar today, Matsumoto said.

Malaysia’s Ringgit

Malaysia’s ringgit rose for a fourth day to reach a two- month high. The currency appreciated as much as 1.5 percent to 3.4780 per dollar, the strongest level since Oct. 14, according to data compiled by Bloomberg.

The ringgit has weakened 5 percent this year, headed for its first annual loss since Bank Negara Malaysia abandoned a fixed- exchange rate of 3.8 to the dollar in July 2005.

A global recession prompted investors to flee emerging markets this year in favor of safer assets such as the U.S. dollar, sending the Korean won down 28 percent and India’s rupee almost 17 percent. Thailand’s baht dropped 14 percent, the rupiah 13.7 percent and the Philippine peso 11.5 percent.

The Taiwan dollar rose to a two-month high today after overseas investors bought more of the island’s shares than they sold on seven of the last eight trading days.

Taiwan’s currency is “relatively stable,” the central bank said yesterday after the currency rose 1 percent, the biggest gain since Oct. 30.

The Taiwan dollar and other “perceived-riskier currencies are doing quite well,” said State Street’s Evans. “The U.S. will do whatever’s necessary to kick-start the economy and the countries that stand to gain most are the exporters such as Taiwan.”

The local dollar rose as much as 0.9 percent to NT$32.440 versus the U.S. currency, the strongest since Oct. 16, before trading at NT$32.465, according to Taipei Forex Inc.

‘Bias Toward Peso’

The Philippine peso advanced to the highest in more than two months as economists in a Bloomberg News survey forecast Bangko Sentral ng Pilipinas will reduce the rate it pays banks for overnight deposits to 5.75 percent today from 6 percent. The Federal Reserve’s reduction of its benchmark rate this week widened the premium offered by the Philippines to the most in four years.

“We are seeing a bias toward the Philippine peso due to the interest-rate differential,” said Lito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila. “The recent aggressive Fed cut is supporting the high-yield currencies and the market is pricing in a less aggressive rate cut in the local currency.”

The peso strengthened as much as 0.7 percent to 46.55 per dollar, the highest since Sept. 29, before trading at 46.66 in Manila, according to Tullett Prebon Plc. The peso is headed for its first annual decline in four years and the biggest drop since 2000.

Elsewhere, Singapore’s dollar strengthened 1.5 percent to S$1.4362 against the U.S. currency. Thailand’s baht advanced 0.2 percent to 34.46. Vietnam’s dong traded at 16,985 versus 16,983 yesterday.