Asian Currencies Climb, Led by Won, Rupiah, as Stocks Advance

By Kim Kyoungwha and Lilian Karunungan

Jan. 16 (Bloomberg) -- Asian currencies strengthened, led by South Korea’s won and Indonesia’s rupiah, as stock-market rebounds in the U.S. and Asia helped shore up confidence in riskier assets.

The Korean currency, Malaysia’s ringgit and Taiwan’s dollar all climbed from one-month lows versus the greenback as the MSCI Asia Pacific Index of shares rose from its worst close in six weeks. Seven of the region’s 10 most-active currencies excluding the yen fell this week as deepening recessions in the U.S. and Europe fueled concern Asian exports are in for a prolonged slump.

“Currency moves are getting initial support from gains in the stock markets,” said Kim Jae Eun, an economist with Hana Daetoo Securities Co. in Seoul. Still, she added, “doubts and fears on whether policy measures will work to shore up the economy are growing.”

The won rose 1.4 percent to 1,373.55 per dollar as of 1:03 p.m. in Seoul, trimming this week’s decline to 2.3 percent. The rupiah strengthened 1.1 percent to 11,059, the ringgit gained 0.5 percent to 3.5777 and Taiwan’s currency climbed to 0.1 percent to NT$33.343.

The MSCI Asia Pacific Index added 1.3 percent, after yesterday posting its lowest close since Dec. 5. The benchmark tumbled 6.4 percent this week, its worst performance in almost two months, as the U.S. reported a sixth monthly drop in retail sales and Germany estimated that the fourth quarter was the economy’s worst in more than two decades.

The yen fell for a second day against the euro on speculation investors will buy higher-yielding assets funded in Japan’s currency as stocks advance. The yen fell to 119.49 per euro in Tokyo from 117.87 late yesterday in New York. Against the dollar, it weakened to 90.27 from 89.84.

Repatriation

Taiwan’s dollar advanced on speculation companies repatriated their overseas earnings to settle debt and pay bonuses to employees before the Lunar New Year holiday. Government offices and most businesses in Taiwan will be closed from Jan. 24 to Feb. 1.

“Exporters are actively selling U.S. dollars,” said Cindy Wang, a currency trader at Bank SinoPac in Taipei. “They have demand for the local currency.”

Malaysia’s currency climbed from the lowest since Dec. 11 ahead of next week’s central bank meeting where policy makers are expected to cut borrowing costs to revive local demand.

“The ringgit could benefit from any knee-jerk reaction to fiscal stimulus or rate-cut efforts,” said Joanna Tan, a regional economist at Forecast Pte in Singapore. “The stock market does reflect some reversal in risk aversion, but we think sentiment is still fragile and there’s further downside to the ringgit and economic growth outlook.”

Malaysia’s exports fell 4.9 percent from a year earlier in November, the biggest drop since 2002. Singapore, the U.S. and Japan, which together accounted for 38 percent of Malaysia’s overseas sales in 2008, are all in the midst of recessions.

Stock Purchases

The rupiah pared this week’s loss to 1.2 percent as global funds bought more shares than they sold for the first time in four days. Still, it may decline next week as companies buy dollars to meet their month-end debt payments, Rully Nova, a currency trader at PT Bank Himpunan Saudara in Jakarta

“The global financial crisis is not yet finished,” Nova said. “It’s not good for the rupiah.”

Elsewhere, the Thai baht rose 0.2 percent to 34.85 per U.S. dollar and the Singapore dollar added 0.6 percent to S$1.4890. The Vietnamese dong and China’s yuan were both little changed at 17,474.50 and 6.8364 respectively. The Philippine peso gained 0.2 percent to 47.275.

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