By Lilian Karunungan
June 5 (Bloomberg) — Asian currencies rose this week, led by Indonesia’s rupiah and the Korean won, as reports signaling a global recession is easing bolstered demand for riskier assets.
The Bloomberg-JP Morgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, and the MSCI Asia-Pacific Index of shares both reached their highest levels since October after U.S. home sales jumped the most in seven years and China’s manufacturing expanded for a third month. Equity funds investing in the region’s emerging markets took in $1.54 billion in the week ended June 3, according to EPFR Global.
“We still see Asian currency strength,” said Emmanuel Ng, an economist at Oversea Chinese Banking Corp. in Singapore. “It is expected to ride on the recovery story.”
The rupiah advanced 1.5 percent today to 9,935 per dollar as of 4:15 p.m. in Jakarta, strengthening beyond 10,000 for the first time in more than seven months. The currency advanced 3.8 percent this week, according to data compiled by Bloomberg. The won appreciated 0.6 percent to 1,243.15 in Seoul, boosting its gain for the week to 1 percent.
The Japanese yen dropped for a third week versus the euro as an improving economic outlook prompted investors to favor higher-yielding assets. The currency traded at 137.31 per euro in Tokyo, from 136.97 late yesterday in New York. It’s declined 1.7 percent this week.
Economists predict a U.S. report today will show employers cut 520,000 jobs in May, less than the 539,000 scrapped the previous month, a Bloomberg survey showed. A report yesterday showed retail sales in the 16-nation euro region increased in April for the first time in seven months.
‘Fairly Robust’
The rupiah had its biggest weekly gain since April as the nation’s economic growth, the fastest in Southeast Asia, helped attract funds. Gross domestic product grew 4.4 percent in the first quarter from a year earlier, compared with 0.4 percent in the Philippines and contractions of more than 6 percent in Singapore, Malaysia and Thailand.
“The rupiah is still one of our picks because the Indonesian economy is fairly robust,” Ng said.
Foreign investors have bought $159 million more Indonesian equities than they sold this week, according to stock exchange data.
The rupiah, Asia’s best-performing currency this year, will rise 3.5 percent by the end of June due to the outlook for a “prudent” interest-rate policy and economic growth, according to Craig Chan, a Singapore-based strategist at Nomura Holdings Inc. The currency will advance to 9,600 by June 30, he said, revising an April forecast of 11,000.
‘Modest Upward Pressure’
South Korea’s currency approached a seven-month high of 1,225.97 reached May 11 as global funds bought $469 million more of the nation’s shares than they sold and exporters repatriated overseas income.
“The won is experiencing modest upward pressure,” said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul. “There are some flows from exporters.”
Shares purchases by global funds also helped lift Thailand’s baht. The currency strengthened for a seventh week, the longest run of gains since 2007, after Finance Minister Korn Chatikavanij said yesterday the economy has bottomed and government spending on “shovel-ready” projects will help spur demand and create jobs.
Worst Is Over
“We do believe the worst may be over for Thailand’s economy, and the rest of Asia,” said Suresh Kumar Ramanathan , a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. “Inflows are still going on, especially into Asia. Gains in Asian currencies are also being driven by dollar weakness.”
The Thai baht strengthened 0.4 percent this week to 34.19 per dollar. Overseas investors have bought $194 million more Thai shares than they sold so far in June, following net purchases in each of the last three months.
Elsewhere, Taiwan’s dollar rose 0.1 percent to NT$32.607 and the Philippine peso gained 0.2 percent to 47.24. The Malaysian ringgit weakened 0.2 percent to 3.4955 and the Singapore dollar fell 0.2 percent to S$1.4458.
To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net
Last Updated: June 5, 2009 05:24 EDT
