Asia Currencies Make Gains, Led by Won, Peso on U.S. Recovery

Nov. 7 (Bloomberg) -- Asian currencies rose this week, paced by South Korea’s won and the Philippine peso, as signs the U.S. economy is recovering from a recession spurred risk-taking.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, climbed after data showed fewer U.S. jobless claims than economists forecast. Indonesia’s rupiah gained on speculation investors will favor higher-yielding assets after the U.S. Federal Reserve repeated it will keep interest rates near zero for “an extended period.” Bank Indonesia’s benchmark rate is 6.5 percent.

“The initial claims figure gave hope that unemployment won’t be so grim, that the fundamental picture is still showing improvement,” said David Cohen, an economist at Action Economics in Singapore. “The Fed were cautious about the risks to the sustained recovery, but so far the data from Asia, including Korea, have been encouraging.”

The won climbed 1.3 percent to 1,167.45 per dollar, according to data compiled by Bloomberg. The Philippine peso gained 0.8 percent to 47.205 and the rupiah strengthened 1.3 percent to 9,460. The Asia Dollar Index advanced 0.6 percent and the MSCI Asia-Pacific Index of shares fell 0.1 percent.

U.S. initial jobless claims dropped by 20,000 to 512,000 in the week ended Oct. 31, the fewest since January, the government reported Nov. 5. The Institute for Supply Management’s factory index rose to a three-year high last month, exceeding all 70 estimates in a Bloomberg survey of economists before the data was released Nov. 2.

Investors should buy won as Korea’s recovery gathers pace, attracting foreign investment fueled by “easy liquidity conditions,” RBC Capital Markets wrote in a note on Nov. 5.

Taiwan Dollar

Taiwan’s dollar rose after a central bank report showed foreign-exchange reserves climbed for a 12th month in October. It strengthened 0.1 percent in the week to NT$32.509.

“There’re more people selling U.S. dollars,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan. “Foreign-exchange reserves rose, which means there were fund inflows and the value of the Taiwan dollar will rise.”

Taiwan’s foreign-exchange reserves, the world’s fourth largest, rose 2.7 percent to $341.2 billion last month, the central bank reported on Nov. 5. A Nov. 9 government report will show exports fell 7.2 percent from a year earlier in October, the least in 13 months, a Bloomberg survey showed.

Overseas investors bought $10.8 billion more Taiwan shares than they sold this year, helping lift the Taiex stock index 63 percent and the local currency 1 percent. The economy may return to growth in the October-to-December period after contracting for five straight quarters, the statistics bureau said in August.

Philippine Peso

The Philippine peso yesterday rose to its highest level in more than a week after the Standard & Poor’s 500 index climbed for a fourth day.

“With Wall Street’s rally, clearly, it seems the market’s preference for riskier assets is there,” said Jonathan Ravelas, a strategist at Manila-based Banco de Oro Unibank Inc. “There is no reason for the dollar to remain strong.”

Elsewhere, the Malaysian ringgit strengthened 0.4 percent this week to 3.402 per dollar and the Thai baht rose 0.2 percent to 33.37. China’s yuan was little changed at 6.8273 in the week versus 6.8275 on Oct. 30. India’s rupee gained 0.4 percent to 46.815.

--Judy Chen, Bob Chen. Editors: Sandy Hendry, James Regan.