Asian Currencies Climb as Stocks Rally; Rupiah, Peso Lead Gains

By Kim Kyoungwha and Lilian Karunungan

Jan. 14 (Bloomberg) -- Asian currencies strengthened for the first time in six days, led by Indonesia’s rupiah and the Philippine peso, as a rebound in regional stocks bolstered demand for emerging-market assets.

Six of the 10 most-active Asian currencies outside Japan advanced, while the remainder were little changed, as the MSCI Asia Pacific Index of shares snapped a four-day losing streak. The rupiah rose for the first time in three days and the peso climbed from its weakest level this year.

“The rise in global stocks will support the rupiah,” said Lindawati Susanto, head of currency trading at PT Bank Resona Perdania. “Risk appetite is there.”

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, gained 0.4 percent to 106.03 as of 4:07 p.m. in Singapore. It this week touched a one-month low of 103.79. The rupiah rose 1.3 percent to 11,058 per dollar and the peso rose 0.9 percent to 47.12.

The MSCI Asia Pacific Index of regional shares rose 0.9 percent to 86.65, paring this year’s decline to 3.3 percent, after Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. government may need to buy or guarantee banks’ tainted assets to revive growth in the world’s largest economy.

The Philippine peso advanced for the first time in five days on speculation the U.S. will take the steps necessary to prevent a prolonged recession. The U.S. is the Philippines’ biggest export market and No. 1 source of remittances from Filipinos working abroad.

“Risk aversion may be waning because of the comforting words from Bernanke,” said Jonathan Ravelas, market strategist at Banco de Oro Unibank Inc. in Manila.

Carry Trades

The yen fell against the euro and the Australian dollar as stock gains encouraged so-called carry trades using cheap funds from Japan to invest in higher-yielding assets elsewhere. Benchmark interest rates are 0.1 percent in Japan, 2.5 percent in Europe and 4.25 percent in Australia.

The yen slid to 119.40 per euro from 117.81 late yesterday in New York, and weakened to 60.83 versus the Australian dollar from 59.40.

Indonesia’s currency was Asia’s best performer today after Bank Indonesia sold dollars yesterday at 11,150 rupiah, according to Lindawati Susanto, head of currency trading at PT Bank Resona Perdania. Central banks intervene in currency markets by buying or selling foreign exchange to influence prices.

The rupiah has slipped 1.4 percent versus the dollar this year, after tumbling 14 percent in 2008.

Intervention Talk

Malaysia’s ringgit also advanced on speculation the central bank intervened to support the local currency, which yesterday reached a one-month low.

“The ringgit’s decline so far has been too fast and there’s concern this could still induce inflation and limit the central bank’s ability to cut rates,” said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit gained 0.3 percent to 3.5695 per dollar in Kuala Lumpur. The currency has dropped 3.2 percent so far this year, after sliding 4.2 percent in 2008.

South Korea’s won gained for a second day on speculation exporters are taking advantage of recent dollar gains to repatriate overseas income. ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, is up 2.9 percent this month, after climbing 12 percent in the second half of 2008.

Exporter Purchases

The Korean currency slid to a one-month low of 1,385.50 against the greenback yesterday after Goldman Sachs Group Inc. forecast the economy, Asia’s fourth largest, will shrink this year.

“There are some offshore dollar sales and exporter settlements after the won dipped below the 1,360 level,” said Jo Hyun Suk, a currency dealer with Korea Exchange Bank in Seoul.

The won rose 0.5 percent to 1,347.50 per dollar in Seoul. It fell 26 percent in 2008, Asia’s worst performance, and so far in 2009 has dropped 6.5 percent.

Elsewhere, the Thai baht was little changed at 34.88 per dollar after the Bank of Thailand lowered its benchmark interest rate by three-quarters of a percentage point to 2 percent. The decision was forecast by four of the 19 economists surveyed by Bloomberg News before the announcement, with the majority having predicted a half-point cut.

The Singapore dollar rose 0.2 percent to S$1.4848 versus the greenback and Taiwan’s dollar was little changed at NT$33.258. Vietnam’s dong and China’s yuan were also little changed at 17,479 and 6.8327, respectively.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net. Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.