Asian Currencies Climb, Led by Won, as G-20 Vows to Ease Crisis

By Kim Kyoungwha and Bob Chen

March 16 (Bloomberg) -- Asian currencies advanced, led by the South Korean won, after the Group of 20 nations pledged over the weekend to restore the financial system to health, spurring a rally in regional stocks.

The Korean currency strengthened the most in three months on speculation the U.S. will expand a currency-swap agreement. Malaysia’s ringgit had its biggest gain in three weeks on optimism share gains will damp risk aversion and revive demand for emerging-market assets. The MSCI Asia Pacific Index of shares climbed to its high for the month.

“Short-term, with the rally in equities continuing and the buying of Asian stocks picking up in recent days, that’s very positive for Asian currencies,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon, the investment- banking unit of French bank Credit Agricole SA. “I’m not exactly positive for the medium term. We’re still in a high- risk-aversion environment.”

The won strengthened 3 percent to 1,440 per dollar as of 3 p.m. in Seoul, its biggest gain since Dec. 10. The advance pared this year’s loss to 13 percent. The ringgit rose 0.8 percent to 3.6850. The Bloomberg-JPMorgan Asian Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed 0.5 percent.

The MSCI Asia Pacific Index gained 1.8 percent to 76.03 after finance chiefs from the G-20 set guidelines on how governments should rid banks of distressed assets that have prompted lenders including Citigroup Inc. and Royal Bank of Scotland Group Plc to seek state aid. The G-20 called the fight its “key priority.”

Weaker Yen

The yen fell for a third day against the dollar on speculation a Bank of Japan plan to buy government debt will spur investors to seek higher-yielding assets overseas. The yen slid to 98.22 versus the dollar from 97.95 late in New York last week. It reached 99.68 on March 5, the lowest since Nov. 5.

The Korean won rose for a second day as Finance Minister Yoon Jeung Hyun asked the U.S. to expand a $30 billion currency swap between the two countries, Chosun Ilbo reported, citing a government official it didn’t identify.

“The global trend of rising stocks and a weaker dollar is giving support to the won,” said Lee Young Chul, a currency dealer with Korea Exchange Bank in Seoul. “What is weighing on the won this week though is that there will be increased demand for the dollar stemming from dividend payments to foreigners.”

Yoon asked U.S. Treasury Secretary Timothy Geithner last week to increase the amount of a currency swap from $30 billion and extend the agreement’s maturity, the Chosun Ilbo said. South Korea’s finance ministry said today it expects a record trade surplus of more than $4 billion for March because cheaper oil is causing imports to tumble faster than exports.

Elsewhere, Singapore’s dollar rose 0.4 percent to S$1.5353 versus the greenback and Taiwan’s dollar strengthened 0.2 percent to NT$34.416. The Philippine peso gained 0.1 percent to 48.485 and Thailand’s baht climbed 0.3 percent to 35.85. Indonesia’s rupiah and the Indian rupee were little changed at 11,980 and 51.4750, respectively.

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