Asian Currencies Have Best Weekly Run in a Year on Stock Rally

March 28 (Bloomberg) -- Asian currencies rose for a fourth week, the longest winning streak in almost a year, as a global stock rally revived investor appetite for emerging-market assets.

South Korea’s won touched a two-month high against the dollar after a central bank report showed the economy shrank less than initially estimated in the fourth quarter. Indonesia’s rupiah strengthened for a third week as overseas investors bought $120 million more of the nation’s equities than they sold this month. The MSCI Asia Pacific Index of regional shares jumped 7.5 percent, the biggest weekly gain since August 2007.

“Asian currencies followed sentiment in the global stock market quite closely,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “That’s why we had a solid performance this week.”

The won was at 1,349.00 per dollar as of the 3 p.m. local close, 4.7 percent stronger than last week, according to Seoul Money Brokerage Services Ltd. Malaysia’s ringgit gained 0.8 percent this week to 3.6155 and Taiwan’s dollar appreciated 0.1 percent to NT$33.779. The rupiah rose 2.3 percent to 11,500.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, had a fourth weekly gain, the longest run since April 2008. It rose 0.8 percent this week to 104.88. Eight of the 10 most-active currencies in Asia outside Japan climbed against the greenback.

Growth Outlook

South Korea’s gross domestic product shrank a revised 5.1 percent in the fourth quarter, the central bank reported yesterday. That’s less than the previously reported 5.6 percent decline and follows a 0.2 percent expansion in the three months to September.

“The Korean won had been one of the harder-hit currencies in recent months so it’s reasonable that they enjoy one of the nicer rebounds as investor sentiment has improved in the past few weeks,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

The rupiah had its biggest weekly advance of the year after better-than-expected earnings at U.S. companies added to speculation a global recession is easing.

“Stock markets are up and that should benefit most of the regional currencies,” said Apratim Chakravarty, head of global markets at HSBC Holdings Plc in Jakarta. “The outlook for the rupiah will also be positive.”

Investors should buy the Indonesian rupiah as its economy will fare better than regional peers, according to Standard Chartered Plc. The Jakarta Composite Index of shares was up 7.5 percent this week.

G-20 Meeting

The Taiwan dollar traded near a six-week high after the central bank on March 26 refrained from cutting the benchmark interest rate from the least on record, saying borrowing costs can’t get any lower. The benchmark Taiex index of shares rose this week by the most in more than six years as purchases by global funds exceeded sales on all but one of the past 12 days.

China said on March 26 stimulus spending has helped stem a slowdown in the world’s third-largest economy. Leaders from the Group of 20 nations may step up efforts to revive global growth when they meet in London on April 2, according to Hideki Hayashi, chief economist at Shinko Securities Co.

“Asian currencies will continue to gain next week because people are more optimistic on stocks and the negative effect of risk is diminishing,” said Hayashi, who is based in Tokyo. “We expect to hear better results from the G-20 summit.”

Elsewhere, the Philippine peso climbed 0.3 percent this week to 48.19 a dollar. The Thai baht traded at 35.32, advancing 0.2 percent in the week. India’s rupee rose 0.1 percent in the week to 50.6025. China’s yuan weakened 0.07 percent to 6.8325. Singapore’s dollar traded at S$1.5138, from S$1.5132 a week ago.