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

June 6 (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-JPMorgan 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 3.8 percent this week to 9,930 per dollar in Jakarta, strengthening beyond 10,000 for the first time in more than seven months. The won appreciated 1 percent to 1,243.15 in Seoul.

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.

‘Fairly Robust’

“The rupiah is still one of our picks because the Indonesian economy is fairly robust,” Ng said.

Foreign investors 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.

South Korea’s currency approached a seven-month high of 1,225.97 reached on May 11 as global funds bought $552 million more of the nation’s shares than they sold this week 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.”

Worst Is Over

Share 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 on June 4 the economy has bottomed and government spending on “shovel-ready” projects will help spur demand and create jobs.

“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 $257 million more Thai shares than they sold this month, following net purchases in each of the last three months.

Elsewhere, Taiwan’s dollar rose 0.1 percent this week to NT$32.607 and the Philippine peso gained 0.2 percent to 47.24. The Malaysian ringgit weakened 0.2 percent to 3.4965 and the Singapore dollar fell 0.2 percent to S$1.4469.