Asian Currencies Gain, Led by Peso and Won, as Stocks Rebound

By Kim Kyoungwha and Judy Chen

Nov. 25 (Bloomberg) -- Asian currencies rose, led by the Philippine peso and South Korea’s won, as a rebound in global equities helped revive demand for emerging-market assets.

Nine of the 10 most-active currencies in Asia outside Japan advanced after a U.S. government rescue of Citigroup Inc. eased concern more banks will fail and powered the biggest two-day rally in the Standard & Poor’s 500 Index since 1987. The peso climbed the most in two weeks and the won rose from a decade low.

“There’s an improved appetite for risk right now,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “The main story seems to be how the Asian markets responded to the Citigroup bailout.”

Korea’s currency rose 0.7 percent to 1,502.30 per dollar at the 3 p.m. local close of trading, according to Seoul Money Brokerage Services Ltd. Yesterday’s closing level of 1,513 was the weakest since March 1998. The peso rose 0.7 percent to 49.455 versus the dollar, according to the Bankers Association of the Philippines, its biggest gain since Nov. 10.

Shares of Citigroup, which plunged 60 percent last week, surged 58 percent yesterday after the government agreed to guarantee its troubled assets and inject $20 billion into the bank. The MSCI Asia Pacific Index added 3.4 percent today, trimming its loss since Lehman Brothers Holdings Inc. collapsed on Sept. 15 to 31 percent.

“The won appears to have hit a bottom with a flurry of profit takers on the recent surge in the dollar emerging,” said Roh Sang Chil, a currency dealer at Kookmin Bank in Seoul. “Stock movements are crucial in shaping the won’s direction, with a big rally in the U.S. giving an early boost.”

Yen Gains

The yen rose, snapping two days of losses against the dollar and the euro, before U.S. reports today that economists forecast will show a recession is worsening in the world’s largest economy.

The yen strengthened to 96.61 against the dollar from 97.34 late in New York yesterday, when it dropped 1.4 percent. Japan’s currency rose to 124.52 per euro from 126.08, after dropping 4.3 percent yesterday.

Investors should be cautious against buying into the rally in Asian currencies, said Jerry Yoshikoshi, a market strategist at Sumitomo Mitsui Banking Corp. in Singapore.

“I don’t think this is the sign of bottoming out of Asian currencies because there will be more ugly stories in global markets and a further deterioration in Asia’s economy is inevitable,” he said.

Faltering Growth

Asian economies will probably ease “substantially” as a global slowdown erodes demand for their exports, consumer confidence falters and banks restrain lending amid the credit crunch, the International Monetary Fund said.

Growth in Asia including Japan, Australia and New Zealand will probably slow to 4.9 percent next year, from a 5.6 percent pace predicted in October, the Washington-based lender said in a report yesterday. The economies, which grew 7.6 percent in 2007, may expand 6 percent this year, the fund said.

Malaysia’s ringgit climbed 0.2 percent to 3.6217 per dollar after the central bank yesterday cut interest rates for the first time since 2003 to spur growth. The currency touched 3.6425 on Nov. 21, the weakest level since November 2006.

Bank Negara Malaysia reduced its overnight policy rate to 3.25 percent from 3.5 percent, citing weakness in exports and the labor market and a slump in local shares.

The Taiwan dollar advanced 0.2 percent to 33.352 after the Cabinet yesterday approved two bills allowing NT$483 billion ($14.5 billion) of spending to stimulate the economy.

Elsewhere, Indonesia’s rupiah rose 2.4 percent to 12,400, Thailand’s baht gained 0.3 percent to 35.18, and India’s rupee strengthened 0.1 percent to 50.0638. The Vietnamese dong was little changed at 16,972.50 from 16.971.50 yesterday.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.