Asian Currencies Gain, Led by Won, Rupiah, as Recession Eases

May 2 (Bloomberg) -- Asian currencies rose against the dollar for a third week as signs a global recession is easing prompt investors to favor riskier assets, helping emerging markets draw funds.

South Korea’s won and Indonesia’s rupiah led the advance on optimism the region’s exports will rebound after Japan reported industrial output grew for the first time in six months and a Chinese gauge of manufacturing climbed for a second month. Taiwan’s dollar jumped the most in six months on April 30 after Chinese companies were allowed to invest in the island for the first time since a civil war ended in 1949.

“All the Asian currencies are on a stronger footing,” said Rajeev Malik, a regional economist at Macquarie Group Ltd. in Singapore. “There’s obviously a better economic outcome anticipated. We’ve passed the eye of the storm and while it’s still bumpy and uncertain, the worst is probably behind us.”

The won surged 4.7 percent this week to close at 1,282.95 per dollar in Seoul, according to data compiled by Bloomberg. The rupiah climbed 2.1 percent to 10,610 and Taiwan’s dollar rose 1.3 percent to NT$33.233.

All regional markets except Indonesia were closed yesterday for the Labor Day holiday. There was no trading in Mumbai on April 30 as well for elections.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, gained for a third week and reached the highest in four months yesterday.

The MSCI Asia-Pacific Index of shares increased 0.1 percent yesterday, extending its gains in the last two months, as the Federal Reserve this week said a U.S. recession is abating.

China, Japan

The Fed’s Open Market Committee said on April 29 that the U.S. economy is contracting at a slower pace than before, while China’s Federation of Logistics and Purchasing in a statement yesterday said the Purchasing Manager’s Index rose to a seasonally adjusted 53.5 in April from 52.4 in March. A reading above 50 indicates an expansion.

Industrial production in Japan rose 1.6 percent in March from the previous month, a Trade Ministry report showed on April 30, double the increase forecast by economists in a Bloomberg survey. The U.S., Japan and China are the world’s top three economies.

The yen traded at 99.17 a dollar after dropping to a two- week low of 99.58 yesterday. It declined to 132.07 per euro yesterday, the lowest since April 14.

Shares Surge

The rupiah climbed to a six-month high against the dollar yesterday after the Jakarta Composite Index of local shares surged 20 percent in April, the best month in a decade. Equity purchases by foreigners exceeded sales by $238 million last month, according to exchange data.

“We’ve seen some good strengthening in the rupiah on the back of easing risk aversion that’s reflected in the stock markets,” said Apratim Chakravarty, head of global markets at HSBC Holdings Plc in Jakarta. “Foreign fund flows have been strong. We think this trend should continue next week.”

Taiwan’s dollar strengthened 1.4 percent this week as China ended a ban on investments in the island following an agreement to open cross-border operations for financial-services companies and more than double the number of direct flights.

The benchmark Taiex index of the island’s shares surged on April 30 by the most since 1991 on speculation money will pour in from the mainland as investment curbs are relaxed.

The currency appreciated 2.1 percent last month, following an advance of 3.1 percent in March.

China Mobile Ltd., the world’s biggest phone company by subscribers, this week said it will buy a 12 percent stake in Far EasTone Telecommunications Co., Taiwan’s third-largest phone company, for NT$17.8 billion ($541 million).

Overweight

Standard Chartered Plc raised the Korean won to “overweight” from “neutral,” suggesting investors should hold more of the currency than benchmarks suggest. The won will gain 12 percent to 1,150 per dollar by the end of the year, David Mann, a Hong Kong-based senior foreign-exchange strategist at the bank, forecast in a research note on April 30.

The won climbed 7.8 percent last month, Asia’s best performance after the rupiah. The nation’s industrial production increased 4.8 percent in March from the previous month, a third straight gain, according to a government report released on April 30. A separate report yesterday showed exports declined 19 percent in April from a year earlier, less than the 23 percent drop forecast by economists in a Bloomberg survey.

A central bank survey this week showed manufacturers were the least pessimistic in seven months.

Risk-Taking Returns

Malaysia’s ringgit completed a second weekly gain after the central bank on April 29 left interest rates unchanged and said economic stimulus will help revive growth in the second half of the year.

“There are reasons to be positive as the fiscal stimulus should start to produce results,” said Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd. in Kuala Lumpur. “The risk-taking culture should return and that’s positive for the ringgit as well as the regional currencies.”

The ringgit strengthened 0.8 percent this week to 3.5585 per dollar.

Elsewhere, the Philippine peso gained 0.1 percent this week to 48.360 versus the greenback and the Thai baht rose 0.3 percent to 35.30. China’s yuan was little changed at 6.8230 versus 6.8273 on April 24.