Asian Currencies Have Best Week of 2009, Led by Won, Rupiah

By Lilian Karunungan

March 14 (Bloomberg) -- Asian currencies strengthened this week, led by South Korea’s won and the Indonesian rupiah, as a global stocks rally spurred demand for emerging-market assets.

The won gained the most in almost three months against the dollar and the rupiah climbed for the first week in nine after Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. said they were profitable. The Bloomberg-JPMorgan Asia Dollar Index had its best weekly advance this year after the U.S., the region’s biggest export market, reported a smaller drop in February retail sales than economists forecast.

“Risk appetite and sentiment has turned more optimistic this week as markets were able to look past bad news to focus on the good,” said Carl Rajoo, an economist at Forecast Singapore Pte. “News on the U.S. banks and the better-than-expected retail sales reinforce hopes that the economy may be bottoming. As a result, equities rallied and likewise Asian currencies.”

The won was at 1,483.50 per dollar as of 3 p.m. yesterday in Seoul, 4.5 percent higher than a week ago. The rupiah rose 0.9 percent this week to 11,978. The Asia Dollar Index climbed 0.7 percent this week, its best performance since the period ended Dec. 19.

Bank of America, JPMorgan and Citigroup all said they made money in the last two months, helping counter the $1.2 trillion of credit losses announced by financial companies since mid- 2007.

Stock Gains

The MSCI Asia-Pacific Index of shares climbed 3.7 percent in the week, halting four weeks of losses.

The won, Asia’s worst performer of 2009, pared this year’s loss to 15 percent. The Kospi stock index rose 6.7 percent this week.

“The atmosphere is turning a bit favorable,” said Lee Young Chul, a currency dealer with Korea Exchange Bank in Seoul. “Still, it’s hard to say a trend for the won’s strength has taken root as there’s no strong view formed on the direction of the market.”

Malaysia’s ringgit gained 0.3 percent this week to 3.7055 per dollar in Kuala Lumpur. The government on March 10 announced a $16 billion economic stimulus plan to help sustain growth. The U.S., Japan, Singapore, Hong Kong and Taiwan are all already in recession.

“We can see risk appetite coming back into the ringgit trades,” said Tan Voon Ching, a currency trader at OSK Investment Bank Bhd. in Kuala Lumpur. “The question remains if this is sustainable.”

Extend Losses

Asian currencies will extend losses in the second quarter as exports slump and fiscal deficits widen, according to DBS Group Holdings Inc., which said the Indian rupee is its “chief concern.”

The India rupee was at 51.5875 per dollar in Mumbai, up 0.2 percent from a week ago. DBS predicts the currency, which reached a record low of 52.183 on March 3, will weaken to 55 by the end of June.

“Many Asian currencies actually lack the positive fundamentals they enjoyed before the global crisis,” Philip Wee, a Singapore-based senior currency economist at Southeast Asia’s largest bank, wrote in a report dated March 12. “On average, the collapse in exports was significantly worse than those during the global tech crisis in 2001-2002 and the Asian financial crisis in 1997-1998.”

Taiwan’s dollar rose 0.8 percent this week to NT$34.495 versus the U.S. currency, Singapore’s strengthened 0.3 percent to S$1.5422 and the Thai baht climbed 0.4 percent to 35.94. The Philippine peso and Vietnam’s dong were both little changed at 48.550 and 17,482.50, respectively.

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