South Korean Won Leads Gains in Asian Currencies as Stocks Rise

By Kim Kyoungwha

Dec. 10 (Bloomberg) -- South Korea’s won led gains in Asian currencies as the region’s stocks rallied, helping revive demand for emerging-market assets.

The Korean currency has advanced 5.4 percent in December, snapping a four-month slide, as global cuts in interest rates and economic stimulus packages helped bolster risk appetite. Eight of the 10 most-active currencies in Asia outside Japan advanced today, including the Philippine peso, the Taiwan dollar and the Chinese yuan.

“There’s a perception that the won may have hit a bottom, which is helping to bring some stability back to the currency market,” said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. “Capping any big gains in the currency will be an expected drop in exports due to the global slowdown.”

Korea’s currency jumped 3.8 percent to 1,393.80 per dollar, the highest level in three weeks, as of the 3 p.m. close local time, according to Seoul Money Brokerage Services Ltd. The peso rose 0.5 percent to 48.26, a fourth day of gains.

South Korea guaranteed lenders’ debt, pledged $11 billion to spur growth, and secured a $30 billion swap deal with the Federal Reserve in the past two months to prevent the economy from slipping into its first recession in a decade.

Shares Advance

A U.S. agreement on the broad outlines of legislation to give General Motors Corp. and Chrysler LLC federal loans to keep operating eased concern more companies will fail and powered a four-day rally in the MSCI Asia Pacific Index of regional shares. The index rose 3.2 percent.

The yen fell against the dollar and the euro after Asian stocks rose, encouraging investors to increase holdings of higher-yielding assets funded with Japan’s currency.

The yen weakened to 119.98 per euro from 119.07 late yesterday in New York. Against the dollar, it declined to 92.50 from 92.13 yesterday. It rose to 91.60 on Dec. 5, the highest since Oct. 24.

The Philippine peso traded near the highest in a month on speculation rising remittances from overseas workers increased the supply of dollars. The currency rose even as a government report today showed exports in October dropped 14.9 percent, the most in seven years.

“The peso has outperformed most currencies in the region in the past few sessions because remittances are finally kicking in,” said Radhika Rao, an economist at IDEAglobal Ltd. in Singapore.

Run of Gains

China’s yuan rose for a sixth day on signs the central bank is allowing currency appreciation to encourage investors to keep money in the nation as the global economic slowdown deepens.

The run of gains in the yuan was the longest since June after a government report today showed foreign direct investment fell 36.5 percent to $5.3 billion in November, the least in 14 months. Forwards contracts showed traders scaled back bets for how far the currency will depreciate over the next 12 months.

“I heard that our customers were asked to give more detailed reasons for sending money out of the country,” said Guo Zhaoyang, a foreign-exchange strategist at China Everbright Bank Co. in the southern city of Guangzhou. “Regulators do have concerns about capital outflows.”

The currency strengthened as much as 0.22 percent to 6.8584 per dollar in Shanghai, the strongest level since Dec. 3, according to the China Foreign Exchange Trade System.

The Taiwan dollar advanced 0.3 percent to NT$33.449 against its U.S. counterpart, according to Taipei Forex Inc. The island posted a trade surplus of $1.52 billion in November after reduced petroleum prices cut import bills, a finance ministry report showed on Dec. 8.

“There are sparse U.S. dollar sale orders, mostly from exporters,” said Yang Kung-yi, a currency trader at Shanghai Commercial & Savings Bank in Taipei. “Transactions are mostly for real demand.”

Industrial Production

Malaysia’s ringgit snapped a three-day advance on speculation traders were selling the currency before a government manufacturing report tomorrow that may show the economy is slowing. Industrial production fell 2.5 percent in October from a year earlier after a 1.7 percent decline in September, a Bloomberg survey of economists showed.

“Manufacturers are pulling back and that points to further downside to the numbers in the months ahead,” said Patricia Oh Swee Ling, an economist at TA Securities Sdn. in Kuala Lumpur. “Exports are contracting across the region.”

The ringgit traded at 3.6165 per U.S. dollar in Kuala Lumpur versus 3.6147 yesterday, according to data compiled by Bloomberg. The currency has dropped 8.5 percent this year, headed for its first annual loss since a fixed exchange rate to the dollar was scrapped in July 2005.

Elsewhere, Indonesia’s rupiah rose 0.3 percent to 10,890 per dollar, Singapore’s currency rose 0.2 percent to S$1.5014 and Vietnam’s dong was little changed at 16,953 versus 16,953.50 yesterday. The Indian rupee rallied 1.1 percent to 49.015. Thailand’s markets were shut for a holiday.

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