Asian Currencies Advance on Recovery, Led by South Korea’s Won

July 18 (Bloomberg) -- South Korea’s won led currency gains in Asia this week as improved earnings and evidence the global economy is recovering from a recession bolstered demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index had its best week in almost two months as China and Singapore this week reported economic growth that beat analysts’ estimates. Indonesia’s rupiah fell, trimming the week’s advance, after two separate hotel explosions in Jakarta yesterday. Taiwan’s dollar had its biggest weekly gain since May on speculation a rebound in global demand for personal computers will boost the island’s exports.

“The market has gradually moved back into risk appetite,” said Callum Henderson, head of currency strategy at Standard Chartered Plc in Singapore. “U.S. corporate earnings and Chinese GDP were above expectations, all of that is supportive for the balance in equities and supportive for assets.”

The won jumped 1.8 percent this week to 1,259.3 per dollar in Seoul, according to data compiled by Bloomberg. Singapore’s dollar strengthened 0.8 percent to S$1.4515, while India’s rupee rose 0.5 percent to 48.74. Taiwan’s dollar appreciated 0.3 percent to NT$32.955.

The Asia Dollar Index climbed 0.6 percent this week, the most since May 22, as China on July 16 said gross domestic product increased 7.9 percent in the second quarter from a year earlier, exceeding the median 7.8 percent forecast in a Bloomberg survey. The MSCI Asia Pacific Index of stocks advanced 2.9 percent, the most since the five-day period ended May 8.

Recovery Signs

Singapore said on July 14 that its economy expanded an annualized 20.4 percent last quarter from the previous three months and raised its forecast for 2009, saying GDP will shrink 4 percent to 6 percent this year, compared with an earlier prediction for a 9 percent contraction.

Goldman Sachs Group Inc. said its profit in the second quarter reached a record $3.44 billion, while Intel Corp.’s third-quarter sales and profit forecasts topped analysts’ estimates. Researcher Gartner Inc. said this week that personal- computer shipments declined 5 percent in the three months to June, about half the pace of its earlier forecast.

The won had its biggest weekly advance in two months as overseas investors bought more Korean shares than they sold for a third day. LG Display Co., the world’s second-largest maker of liquid-crystal displays, on July 16 reported second-quarter profit beat estimates. The Kospi index of local shares completed its fourth-straight weekly advance.

“The tech sector has benefited from the positive reports this week,” said David Cohen, director of Asian forecasting at Action Economics in Singapore. “That’s supportive of the Korean won and the Korean stock market.”

Electronics Exports

Taiwan’s dollar touched an almost two-week high on optimism an end to the global recession will fuel demand for the island’s exports. Electronics account for about two-fifths of Taiwan’s overseas sales and China is the biggest buyer.

The rupiah fell the most in two weeks after blasts hit the Ritz Carlton and JW Marriott hotels in Jakarta. The explosions, which killed at least eight people and injured 42, are Indonesia’s first terrorist attacks since 2005.

“This will throw a spanner in the works for regional markets, which have been getting used to an upbeat outlook,” said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. “This will keep regional currencies in volatile trade.”

Samurai Bond

Indonesia went ahead with a 35 billion yen ($374 million) sale of 10-year samurai bonds yesterday and set the terms in a private placement, Rahmat Waluyanto, the finance ministry’s director general of debt management, said in a text message.

The rupiah fell 0.5 percent yesterday to 10,175 a dollar, trimming the week’s gain to 0.2 percent. Malaysia’s ringgit traded little changed at 3.5680 after touching 3.5535 on July 16, a one-week high.

Indonesia was hit by bombings annually from 1999 to 2005 that left about 280 people dead and authorities have blamed the Southeast Asian terrorist group, Jemaah Islamiyah, for the attacks.

Elsewhere, the Philippine peso climbed 0.5 percent this week to 48.075 a dollar and the Thai baht was little changed at 34.07. China’s yuan traded at 6.8317 versus 6.8328 on July 10.