By Lilian Karunungan and Karl Lester M. Yap
Nov. 10 (Bloomberg) -- The Philippine peso and the Indian rupee led gains in Asian currencies on optimism increased spending and interest-rate cuts around the world will help bolster global growth.
Malaysia's ringgit and the South Korean won also advanced after the Group of 20 nations said yesterday they are prepared to use ``monetary and fiscal policy'' measures to battle a slowdown. Asian stocks rallied for the first time in three days after China yesterday announced a $586 billion economic stimulus package to boost its economy. The Philippine central bank cut the reserve requirement for local banks on Nov. 7 and Taiwan reduced its benchmark interest rate yesterday.
``These policies ease pressure on liquidity and credit and provide some relief to emerging-market currencies,'' said Lito Biacora, vice president for treasury at Bank of the Philippine Islands in Manila.
The peso rose 0.8 percent to 48.42 per dollar at 4:43 p.m. in Manila, adding to two weeks of gains, according to the Bankers Association of the Philippines. The rupee gained 0.6 percent to 47.3825, according to data compiled by Bloomberg.
The G-20 nations said after a meeting in Sao Paulo that they are ready to act ``urgently'' and governments must take all measures to bolster economic growth. China's stimulus package is equivalent to almost a fifth of its gross domestic product last year and will be used by the end of 2010.
Yen Weakens
The Japanese yen declined for a second day against the euro and the dollar on speculation China's plan will give investors more confidence to buy higher-yielding assets using money borrowed in Japan.
The yen fell to 99.09 per dollar from 98.24 late in New York on Nov. 7. It declined to 127.28 against the euro from 124.90 at the end of last week.
India's rupee gained for a second day after global funds bought more of the nation's shares than they sold in the first four days of last week, stock exchange data showed.
``The Chinese economic package is good news for currencies because it shows Asian governments are proactive in dealing with the crisis,'' said Krishnamurthy Harihar, a treasurer at Development Credit Bank Ltd. in Mumbai. ``The rupee may gain as the portfolio investment numbers are looking better.''
India's currency may strengthen to 47 in the coming weeks, Harihar said.
Malaysian Ringgit
Malaysia's ringgit snapped two days of losses after the government said it may consider increasing the current 7 billion ringgit ($1.98 billion) stimulus package after evaluating its impact on the economy.
The government expects the stimulus package to start having an effect on the economy in the first quarter of next year, Finance Minister Najib Razak told reporters today.
``The market is reacting to China's plan because it's a crucial factor in cushioning the region from a major slowdown,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``The local factors are less encouraging.''
The ringgit advanced 0.3 percent to 3.5415 per dollar, according to data compiled by Bloomberg.
Fitch Ratings today cut the outlook on Malaysia's credit rating to ``stable'' from ``positive,'' citing a slowdown in electronics exports and lower commodity prices. China is Malaysia's fourth-largest export market.
Traders bet the ringgit will weaken to 3.5482 per dollar in three months, according to non-deliverable forwards contracts. Forwards are agreements in which assets are bought and sold at current prices for delivery at a specified future date. They are settled in dollars.
Elsewhere, the Korean won gained 0.2 percent to 1,326.30 per dollar and the Singapore dollar rose 0.1 percent to S$1.4906. The Taiwan dollar was little changed at NT$32.823 and the Thai baht traded at 34.92, from 34.96 last week. Vietnam's dong was little changed at 16,991 and the Indonesian rupiah declined 0.4 percent to 10,940.
To contact the reporter on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; Karl Lester M. Yap in Manila at kyap5@bloomberg.net.
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