Asian Currencies Head for Longest Weekly Winning Run in a Year

By Judy Chen

March 27 (Bloomberg) -- Asian currencies headed for a fourth weekly gain, the longest winning streak in almost a year, as a global stock rally revived investor appetite for emerging- market assets.

South Korea’s won headed for its biggest weekly advance since Dec. 19, after a central bank report showed the economy shrank less than initially estimated in the fourth quarter. Indonesia’s rupiah is set to strengthen for a third week as overseas investors bought $120 million more of the nation’s shares than they sold this month.

“Asian currencies followed the sentiment in global stock market quite closely,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “That’s why we had solid performance this week.”

The won climbed 5.6 percent this week to 1,337.35 per dollar as of 11:48 a.m. local time, according to Seoul Money Brokerage Services Ltd. Malaysia’s ringgit gained 0.8 percent this week to 3.6143 and Taiwan’s dollar strengthened 0.1 percent to NT$33.76. The rupiah rose 2.8 percent to 11,455 a dollar.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, was headed for a fourth weekly gain, the longest winning streak since April 2008. It rose 1.1 percent this week to 105.18. Eight out of the 10 most-active currencies in Asia outside Japan climbed against the greenback as the MSCI Asia Pacific Index of regional shares jumped 8.4 percent, the most since March 2002.

Growth Outlook

South Korea’s gross domestic product shrank a revised 5.1 percent in the fourth quarter, the central bank reported today. That’s less than the previously reported 5.6 percent decline and follows a 0.2 percent expansion in the three months to September.

“The Korean won had been one of the harder-hit currencies in recent months so it’s reasonable that they enjoy one of the nicer rebounds as investor sentiment has improved in the past few weeks,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

The Taiwan dollar traded near a six-week high after the central bank yesterday refrained from cutting the benchmark interest rate from the least on record, saying borrowing costs can’t get any lower. The benchmark Taiex index of shares was poised for the best week in more than six years as purchases by global funds exceeded sales on all but one of the past 12 days.

China yesterday said stimulus spending has helped stem a slowdown in the world’s third-largest economy. Leaders from the Group of 20 nations may step up efforts to revive global growth when they meet in London on April 2, according to Hideki Hayashi, chief economist at Shinko Securities Co.

“Asian currencies will continue to gain next week because people are more optimistic on stocks and the negative effect of risk is diminishing,” said Hayashi, who is based in Tokyo. “We expect to hear better results from the G-20 summit.”

Elsewhere, the Philippine peso climbed 0.3 percent this week to 48.15 a dollar. The Thai baht traded at 35.31, set for a weekly advance of 0.3 percent. China’s yuan weakened 0.06 percent to 6.8317.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net