Korea Won Leads Gain in Asia Currencies This Week; Rupiah Falls

By Kim Kyoungwha and Bob Chen

Nov. 28 (Bloomberg) -- South Korea’s won rallied this week, leading gains in Asian currencies, as the nation’s record current-account surplus eased a shortage of dollars. The Philippine peso posted its biggest weekly advance in four months.

Seven of the region’s 10 most-traded currencies excluding the yen strengthened over the past five days as shares clinched the biggest gain in a month after China’s largest interest-rate cut in 11 years. Indonesia’s rupiah and the Thai baht fell for a third week.

“Risk appetite is improving slightly,” said Mitul Kotecha, Hong Kong-based global head of foreign-exchange strategy at Calyon, a unit of France’s Credit Agricole SA. “The trend is still downwards for Asian currencies going into next year. There are still dollar-demand and growth concerns.”

The won rose 2.5 percent this week to 1,459 per dollar as of 1:10 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The advance pared this month’s decline to 11 percent, the worst among the world’s 16 most-active currencies. The peso climbed 2.1 percent on the week to 48.85 a dollar.

In South Korea, foreign investors bought more local shares than they sold for a third consecutive day, the longest winning streak since the end of October. Finance Minister Kang Man-Soo said the current-account surplus will exceed $1 billion this month after a record $4.9 billion surplus in October.

“The surplus provides a big psychological boost to the currency market,” said Jeff Kim, a currency dealer with Korea Exchange Bank in Seoul. “An uncontrollable surge in the dollar isn’t there anymore but month-end import deals are flowing in.”

‘Rally in Stocks’

Risk appetite revived as policy makers across the globe unveiled measures to shore up confidence. The People’s Bank of China cut its one-year lending rate by 1.08 percentage points to 5.58 percent on Nov. 26, on the heels of the Federal Reserve’s $800 billion commitment to counter a seizure in credit markets.

The MSCI Asia-Pacific Index of regional shares soared 6.1 percent this week to 82.15, snapping two weeks of losses.

“Sentiment has improved on regional currencies given the rally in U.S. and Asian stock prices,” said Joanna Tan, an economist at Forecast Pte in Singapore. “The overarching factor is still heightening risks to growth.”

The yen headed for its third monthly advance against the dollar and its fourth monthly gain against the euro after the European Union proposed a 200 billion euro ($258 billion) stimulus package.

Japan’s currency traded at 95.528 per dollar from 95.19 late yesterday and 95.96 a week ago. It was quoted at 123.11 per euro in Tokyo from 122.89 yesterday, for a 2.5 percent decline this week.

Filipino Remittances

The Philippine peso climbed against the dollar for a sixth day, heading for its longest run of gains in 13 months, on speculation corporate demand for the U.S. currency is declining.

The currency headed for a monthly gain on speculation remittances from the more than 8 million Filipinos abroad will increase as the year-end holidays approach. Funds sent home rose 17 percent to $12.3 billion in the first nine months of 2008 from a year earlier, according to the central bank.

The peso advanced 0.3 percent to 48.695 per dollar in Manila, according to Tullett Prebon Plc. The Taiwan Dollar reached as high as NT$33.216 today, up 0.5 percent from the end of last week, before trading at 33.28.

Thailand’s baht slumped to a 21-month low on concern political unrest will slow growth in Southeast Asia’s second- biggest economy. The government declared a state of emergency at airports in Bangkok, which were shut by protesters demanding resignation of Prime Minister Somchai Wongsawat.

“We’ve seen domestic demand weaken all throughout the year, hurt by the political turbulence and amid a sharply slowing global economy,” said Nicholas Bibby, an economist at Barclays Bank Plc in Singapore. “We’re expecting the baht to drift weaker from here, partly due to the political situation.”

The baht fell 0.8 percent on the week to 35.49 per dollar, the worst-performing currency after the rupiah which slumped 2.2 percent this week to 12,253. The Malaysian ringgit rose 0.2 percent this week to 3.617.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net. Bob Chen in Hong Kong at bchen45@bloomberg.net.