By Kim Kyoungwha
Nov. 27 (Bloomberg) -- Indonesia's rupiah and the Philippine peso rose after China cut interest rates by the most in 11 years, helping revive demand for emerging-market assets.
The People's Bank of China yesterday cut its one-year lending rate by 1.08 percentage points to 5.58 percent, powering a 1.6 percent gain in the MSCI Asia-Pacific Index of regional shares. Indian rupee non-deliverable forwards declined on speculation overseas investors will shun the nation's assets after terrorist attacks in Mumbai.
``Asian currencies may attempt to ride higher on slightly better global equities and slightly better appetite towards emerging markets,'' said Emmanuel Ng, a strategist with Oversea- Chinese Banking Corp. in Singapore. ``The bombings in Mumbai may see some caution towards the rupee.''
The rupiah gained 1.2 percent to 12,400 per dollar as of 3:07 p.m. in Jakarta, according to data compiled by Bloomberg. The Philippine peso climbed 0.6 percent to 48.84 and the Taiwan dollar reached an eight-day high of 33.167, before closing little changed at 33.30.
``That was a pretty dramatic rate cut and Taiwan benefits as much as anyone from Chinese demand,'' said David Cohen, director of Asian forecasting at Action Economics in Singapore.
The rate cut comes less than three weeks after China, the biggest contributor to global economic growth last year, announced a 4 trillion yuan ($586 billion) economic stimulus package to spur growth. China, including Hong Kong, accounted for 22 percent of Taiwan's export orders last month and overseas sales are equivalent to about 70 percent of the island's gross domestic product.
Yen Gains
The yen rose against the euro before reports that may show money-supply growth and inflation are slowing in Europe, giving the European Central Bank more scope to cut interest rates.
The yen strengthened to 122.67 per euro in Tokyo from 123.24 late yesterday in New York. It climbed to 95.18 per dollar from 95.67.
Currency moves may be exaggerated today as U.S. financial markets are closed for the Thanksgiving Day holiday, according to Mitsuru Sahara, senior currency sales manager in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest lender by assets.
``We cannot rule out big swings in currencies today because volume will be very light as the U.S. markets are out of the action,'' Sahara said. ``Terrorism in India is also somewhat unsettling.''
Mumbai Attacks
Rupee one-month NDFs fell 0.8 percent to 50.40 per dollar after terrorist attacks targeting foreigners in Mumbai left as many as 101 people dead and 287 injured. Forwards are agreements in which assets are bought and sold at current prices for delivery at a later specified time and date. Non-deliverable contracts are settled in dollars. India halted trading in stocks, bonds and the rupee today as a result of the attacks.
``Probably today the rupee will be an underperformer, whereas the rest of the regional currencies will be quite firm,'' said Tim Condon, chief Asia economist at ING Groep NV in Singapore. ``One hopes this doesn't prove the beginning of a trend because that would be terrible.''
South Korea's won rose, reversing an earlier loss, on speculation the nation's record current-account surplus will ease a shortage of dollars. The currency rose 0.1 percent to 1,476 versus the greenback, after earlier sliding as much as 1.1 percent.
``The surplus is beyond expectations,'' said Lee Myung Hoon, a currency dealer with state-run Industrial Bank of Korea in Seoul. ``Falling oil prices and less overseas travel mean the trend can be sustained, which is a big boost to the won.''
The central bank reported a current-account surplus of $4.91 billion for October, following a deficit of $1.35 billion in September. The current account is the broadest measure of trade, tracking goods, services and investment income.
Thai Protests
Thailand's baht fell for a second day, touching a 21-month low, after anti-government protesters seized and closed two Bangkok airports and Prime Minister Somchai Wongsawat rebuffed calls for an election. The currency reached 35.39 per dollar, the weakest since February 2007, before trading 0.2 percent lower at 35.31 in Bangkok.
Elsewhere, Singapore's dollar fell 0.2 percent to S$1.5122, while the ringgit was little changed at 3.6220. Vietnam's dong was also little changed at 16,973.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
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