Asia Currencies Rise This Week, Led by Rupiah, on Recovery Hope

By Kim Kyoungwha

April 17 (Bloomberg) -- Asian currencies gained this week, led by the Indonesian rupiah, as signs a global recession is easing whetted investors’ risk appetite, helping draw funds to emerging markets.

The rupiah surged 5.5 percent this week, its best performance this year, as polls suggesting President Susilo Bambang Yudhoyono will be re-elected bolstered demand for Indonesian assets. The MSCI Asia Pacific index of regional shares advanced after reports showed industrial production and investment picked up last month in China, the region’s second- biggest economy.

“I think there’s some reason for optimism, with an economic trough possibly reached,” said Naomi Fink, a senior currency analyst with Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “In Asia, China’s March data was one hopeful signal.”

The rupiah traded at 10,720 per dollar as of 10:15 a.m. in Jakarta, compared with 10,725 yesterday and 11,310 at the end of last week. Singapore’s dollar rose 1.3 percent this week to S$1.4974 and the Malaysian riggit rose 0.4 percent to 3.6022.

Urban fixed-asset investment in China surged by almost a third in March and industrial-output growth accelerated, reports showed yesterday, boding well for growth in the rest of Asia. First-quarter GDP grew 6.1 percent, the slowest pace in almost a decade, as exports slumped.

Fund Inflows

The rupiah is the only gainer this year among Asia’s 10 most-traded currencies after Yudhoyono, who plans to stand for re-election in July, won the support of more than half of respondents in a poll following parliamentary elections last week. Indonesia yesterday raised $650 million from its first- ever international sale of Islamic dollar bonds, attracting orders for more than six times the debt on offer.

Investors pumped more money into emerging-market equities for a sixth straight week, adding to evidence risk aversion among global funds is receding. They bought a net $1.7 billion in the week through April 15, according to Cambridge, Massachusetts-based EPFR Global, a research company that tracks $11 trillion of funds worldwide.

The yen declined to 99.49 a dollar from 99.27 yesterday in New York, while the dollar traded at $1.3122 per euro versus $1.3186.

Singapore’s dollar rose this week on prospects the Monetary Authority of Singapore won’t seek devaluation after it said it sees no reason for “any undue weakening” of the city-state’s currency. The local dollar traded at S$1.4981 against the greenback, versus S$1.5138 last week.

‘Uptrend Valid’

South Korea’s won was headed for a sixth weekly gain, its best winning streak in 18 months, on optimism record-low borrowing costs and government stimulus plans will help salvage an economy on the brink of recession.

The currency has gained 4.1 percent versus the dollar so far this month, after surging 11 percent in March, as signs a global recession is abating bolster demand for emerging-market assets. Sales at the nation’s major department stores rose in March on purchases of luxury goods, food and cosmetics, a government report showed today.

“Overall the won’s uptrend is valid though the pace of gains may not be as fast as last month,” said Jo Hyun Suk, a currency dealer with Korea Exchange Bank in Seoul. “Demand and supply of dollars are well balanced as exporters settle deals around mid-1,300, while importers buy on dips in the dollar.”

The won rose 0.3 percent this week to 1,328.35 in Seoul, according to data compiled by Bloomberg. It touched a three- month high of 1,298.05 on April 10.

Elsewhere, the Philippine peso climbed 0.5 percent to 47.772 against the U.S. currency. Taiwan’s dollar was little changed at NT$33.80, compared with NT$33.795 on April 10, and the Thai baht traded at 35.42 per dollar versus 35.40.

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