Asian Currencies: Won Rallies on Bond Sale; Taiwan Dollar Gains

By David Yong and Lilian Karunungan

April 9 (Bloomberg) -- South Korea’s won rose, leading gains in Asian currencies, after the government sold $3 billion of global bonds, boosting the nation’s foreign-exchange reserves and its capacity to defend the currency.

The won snapped a two-day loss after the central bank kept the benchmark interest rate at a record low today, citing signs that manufacturing is improving. A gauge of regional stocks rebounded after Japan’s machinery orders rose for the first time in five months as the government prepares a $154 billion stimulus package to pull Asia’s biggest economy out of recession. Taiwan’s dollar advanced as risk appetite in emerging markets improved.

“Investors would want exposure to Korea for a turnaround story,” said Singapore-based Scott Bennett, who helps manage $28 billion in the region at Aberdeen Asset Management Asia Ltd. “The currency has come back a lot.”

The won climbed 2.4 percent to 1,322.50 per dollar at the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. It appreciated 17 percent over the past month and reached a three-month high of 1,306 on April 6. Taiwan’s dollar rose 0.4 percent to NT$33.777 and Malaysia’s ringgit strengthened 0.5 percent to 3.6125.

Korea sold $1.5 billion each in notes maturing in five and 10 years in its first overseas debt offering since November 2006, attracting $8 billion of orders, the finance ministry said.

Bank of Korea

The sale was a pre-emptive measure to “prepare for uncertainty on global financial markets,” the ministry said in a statement. Korea’s foreign-currency reserves rose to $206.3 billion at the end of March from $201.5 billion a month earlier, the Bank of Korea said on April 2.

Korea’s central bank today kept the seven-day repurchase rate at 2 percent, as expected by nine of 11 economists surveyed by Bloomberg News.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, halted a two-day decline, rising 0.3 percent. The MSCI Asia Pacific Index of stocks climbed 3.2 percent, the biggest gain in a week.

The yen declined to 132.85 per euro in London from 132.48 in New York yesterday as investors reduced demand for safer currencies. It was little changed at 99.99 per dollar from 99.76.

Japan Orders

Japanese machinery orders, an indicator of capital investment in the next three to six months, climbed 1.4 percent in February from a month earlier, the Cabinet Office said today in Tokyo. The median estimate of 28 economists surveyed by Bloomberg was for a 6.9 percent drop.

Taiwan’s dollar rose following its biggest two-day drop in eight years as prospects for additional stimulus spending by Japan fueled a rally in stocks. The island’s Taiex index surged 4.1 percent to the highest level since Oct. 3.

“The Taiwan dollar has been closely tracking the global stocks move,” said Sebastien Barbe, the Hong Kong-based head of emerging-market strategy at Calyon, the investment banking unit of France’s Credit Agricole SA. “Whenever the U.S. market rebounds, the Taiex will rally on better risk appetite.”

Malaysia’s ringgit held gains, snapping a two-day slump, after a government report showed industrial production fell 15 percent in February from a year earlier. Figures for January were revised higher to a 19.8 percent drop. The Kuala Lumpur Composite Index of shares climbed 1.2 percent after two days of losses.

Thai Protests

Thailand’s baht was little changed at 35.44 per dollar after losing as much as 0.3 percent. Prime Minister Abhisit Vejjajiva today said he has no reason to resign as anti-government protests escalated. The government can handle those protests without using emergency powers, he said yesterday.

“The mentality for the time being is that the protests are occurring in a civilized manner,” said Kobsidthi Silpachai, head of capital markets research at Kasikornbank Pcl in Bangkok, the nation’s third-largest lender. “Risk appetite is rebounding a bit. It doesn’t take a whole lot of money to move it around.”

Elsewhere, the Singapore dollar traded at S$1.5147 from S$1.5153 yesterday, and China’s yuan was little changed at 6.8351 against the greenback. Vietnam’s dong traded at 17,775 versus 17,783.50 yesterday.

Markets in the Philippines and Indonesia are closed today, and will shut along with Singapore, Hong Kong and India tomorrow for public holidays.

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