Asian Currencies: Won, Peso, Rupee Rise as Asian Equities Rally

South Korea’s won, the Philippine peso and the Indian rupee rose as regional stock gains lured investment from abroad.

The won, Asia’s worst performer last year, also advanced as the central bank reported an increase in the nation’s foreign- exchange reserves for the first time in nine months. Global funds bought more shares than they sold for a fourth day, according to Korea Exchange. The Philippine peso rose on its first trading day of 2009 on speculation remittances piled up during a 1 1/2-week holiday.

“Foreign buying of local stocks is providing a psychological support to the currency market,” said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “The won will move between 1,290 and 1,350 for the day.”

The won appreciated 0.6% to 1,313.50 per dollar at the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. It dropped 4.7% on Jan. 2, the most since Nov. 6. The peso rose 0.8% to 47.140 in Manila, according to Tullett Prebon Plc. That’s its biggest one-day gain since Dec. 17.

India’s rupee gained 0.8 percent to 48.375 per dollar as local stocks advanced after the Reserve Bank of India cut both its overnight lending and borrowing rates to all-time lows on Jan. 2. India unveiled a second economic stimulus package the same day to counter the global slump.

Reserves Rise

South Korea’s Kospi stock index added 1.4% to 1,173.57, climbing for a third straight trading day. The MSCI Asia Pacific Index of stocks rose 1.3%.

South Korea’s foreign-exchange reserves, which fell for most of 2008, rose to $201.2 billion in December from $200.5 billion the previous month, the Bank of Korea said in Seoul today. The holdings tumbled after reaching a record $264.25 billion in March as policy makers intervened in currency markets to help support the won, which last year slumped 26% against the dollar and 40 percent versus the yen.

Central banks intervene by buying or selling foreign currency to try and influence exchange rates.

The yen traded at 92.26 against the U.S. currency, versus 91.83 late in New York on Jan. 2, when it reached 92.42, the weakest level since Dec. 11. It gained to 127.03 against the euro from 127.76.

Remittances

The peso strengthened by the most in more than two weeks against the U.S. dollar as money sent home by Filipinos working abroad increased during the Christmas holiday. Remittances account for a 10th of the Southeast Asian nation’s gross domestic product. The peso climbed 3% in December, trimming last year’s losses to 13.1%.

“It’s all bunched up, so there’s a tendency for banks to unload,” said Jonathan Ravelas, market strategist at Banco de Oro Unibank Inc. in Manila. “They couldn’t sell because there was no market.”

Malaysia’s ringgit fell before government announcements this week that may show exports and industrial production slumped further in November.

The ringgit slid for a second day after reports showed manufacturing contracted in the U.S., Europe and China, adding to evidence a global recession is deepening. Forwards contracts show traders are betting the currency will weaken over the next 12 months.

Malaysia Slowdown

“The data this week is going to signal that the slowdown will be much faster than what people are expecting,” said Suresh Kumar Ramanathan, a currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “It will have a repercussion on the ringgit trades.”

The ringgit dropped 0.7% to 3.4905 per U.S. dollar in Kuala Lumpur, according to data compiled by Bloomberg. The currency may reach 3.62 by the end of March, Suresh said.

Malaysian exports fell 6.2% in November from a year earlier, according to a Bloomberg News survey of economists before a trade ministry report due Jan. 7. Overseas sales slid in October for the first time in more than a year and November’s projected slide would be the biggest since February 2002.

Industrial production also decreased 6.2% in November, according to a separate survey before a statistics department report on Jan. 9. That would be the third drop in a row and the largest decline in almost four years.

Non-deliverable forwards show the currency may weaken to 3.5025 in three months and 3.5150 in 12 months. Forwards are agreements in which assets are bought and sold at current prices for delivery at a specified future date.

Elsewhere, Taiwan’s dollar fell 0.4% to NT$33.005 against the U.S. currency and Singapore’s dollar dropped 1 percent to S$1.4685. The Indonesian rupiah traded at 11,070 versus 10,900 on Dec. 31. The Thai baht weakened 0.1% to 34.83. Vietnam’s dong was at 17,476 from 17,483. (Bloomberg)