Asia Currencies Rise, Led by Won, as Recovery Spurs Risk-Taking

By Lilian Karunungan and Patricia Lui

Feb. 3 (Bloomberg) -- Asian currencies rose, led by South Korea’s won and the Philippine peso, as gains in U.S. home sales and Brazil’s factory output stoked optimism a global economic recovery will boost appetite for emerging-market assets.

The won climbed for a second day as foreign investors bought more Korean stocks than they sold and the MSCI Asia- Pacific Index of shares advanced. Sales of previously owned U.S. homes increased 1 percent in December after sliding 16 percent in November, the National Association of Realtors said yesterday. Brazil’s output jumped a greater-than-expected 18.9 percent in December from a year earlier, government data showed.

“The tone in Asian currencies is a bit more supportive today as the recent macro data flow out of the U.S. has been more positive,” said Prakriti Sofat, a regional economist at Barclays Plc in Singapore. “We are seeing a bit of a breather after the recent sell-off.”

The won strengthened 0.9 percent to 1,149.25 per dollar as of the 3 p.m. close in Seoul, according to data compiled by Bloomberg. It reached this year’s low of 1,174.90 two days ago. The peso climbed 0.8 percent to 46.025 and the Indonesian rupiah advanced 0.6 percent to 9,300.

The MSCI Asia-Pacific Index of equities rose 1.2 percent after the Standard & Poor’s 500 Index yesterday capped its biggest two-day rally since October with a 1.3 percent advance. South Korea’s benchmark Kospi index of stocks gained 1.2 percent, paring this year’s loss to 4 percent.

Exporters Selling

“Global stock markets are gaining strength and it’s the same in Korea,” said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul. “Foreigners are buying stocks. Around the 1,160 level, there were a lot of exporters selling, so it was hard for the Korean won to weaken.”

Korean exports increased 47 percent from a year earlier in January, the biggest gain in more than 20 years, according to government data released this week. The government forecast a trade surplus for this month of about $2 billion, after imports last month exceeded overseas sales for the first time in a year.

Malaysia’s ringgit had its first gain in three days, boosted by speculation the central bank will raise interest rates as economic recoveries gather pace at home and abroad. The currency strengthened 0.3 percent to 3.4070 per dollar in Kuala Lumpur.

A trade ministry report on Feb. 5 will show Malaysia’s exports rose 11.8 percent in December, the most since September 2008, according to the median forecast in a Bloomberg News survey of economists.

“The latest data are bringing back optimism in the market and are supportive of risk-taking,” said Tan Voon Ching, a foreign-exchange trader at OSK Investment Bank Bhd. in Kuala Lumpur. “Recent talk of higher interest rates should also support the ringgit.”

Interest-Rate Outlook

Bank Negara Malaysia on Jan. 26 said borrowing costs cannot remain too low for too long to prevent “financial imbalances.” The central bank will raise its overnight rate by at least 25 basis points from a record-low 2 percent in the second quarter, according to five of 12 economists in a separate Bloomberg poll.

Elsewhere in Asia, the Taiwan dollar advanced 0.2 percent to NT$32 versus the greenback. The Singapore dollar gained 0.1 percent to S$1.4083 and the Thai baht rose 0.2 percent to 33.07. China’s yuan was little changed at 6.8267.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net; Patricia Lui at plui4@bloomberg.net