Asian Currencies Gain This Week on Recovery, Stocks Investment

April 3 (Bloomberg) -- Malaysia’s ringgit and South Korea’s won led gains in Asian currencies this week after data showed an economic recovery is gathering pace, encouraging funds abroad to raise holdings of regional shares.

The Bloomberg-JPMorgan Asia Dollar Index reached the highest level in 19 months as Korea and Thailand reported increases in factory output and exports, while China’s manufacturing expanded at a faster rate. The ringgit advanced to its strongest in 20 months before a government report yesterday that showed overseas sales of the nation’s goods rose for a third month in February.

“Investors put money into stocks and Asia is favored for its stronger growth prospects, boosting regional currencies,” said Hideki Hayashi, a global economist at Mizuho Securities Co. in Tokyo. “Risk appetite is growing with improvements in U.S. economic data.”

The ringgit appreciated 1.7 percent this week to 3.2490 per dollar in Kuala Lumpur and reached 3.2437, the highest level since July 2008, according to data compiled by Bloomberg. The won rose 1.2 percent to 1,125.85.

The Asia Dollar Index increased 0.4 percent from March 26, while the MSCI Asia-Pacific Index of regional equities rallied 1.7 percent and posted its best close in 11 weeks. Global investors bought a net $921 million of Taiwan shares in the four days through April 1, $450 million in Korea and $200 million in Thailand, stock exchange data shows.

‘Investors’ Trust’

Malaysia’s currency gained for a third day before a U.S. Labor Department report that showed employers in the world’s biggest economy increased hiring in March by the most in three years. Malaysia’s trade ministry said yesterday exports rose 18 percent in February from a year earlier, compared with a 25 percent increase forecast in a Bloomberg News survey. January’s 37 percent gain was the most in more than 11 years.

“Malaysia has investors’ trust in terms of stable growth prospects, supporting the appreciation in the ringgit,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala Lumpur. “With good data in the U.S., investors’ appetite for riskier assets may increase, which will also help boost the currency.”

The ringgit may strengthen by about 4.8 percent to 3.10 by year-end, Banno forecast.

U.S. non-farm payrolls climbed by 162,000 in March, the Labor Department said yesterday in Washington.

Korea Investment

Korea’s won had its best weekly gain in a month after a government report on April 1 showed exports rose 35.1 percent in March, compared with 30.5 percent in the previous month and beating the median 31.7 percent forecast in Bloomberg’s survey.

The won touched 1,122.15 per dollar, the strongest level since Jan. 19, as funds based abroad bought more Korean shares than they sold on all but one day since the end of February, according to exchange data. The Kospi index was up 1.5 percent this week.

“Foreigners are buying stocks, and there is no reason for the won to weaken right now,” said Kim Yule, a Seoul-based currency trader at BNP Paribas SA. “The won will probably stay at the level of 1,120 for some time.”

Taiwan’s dollar posted its biggest five-day gain in three weeks as international investors increased holdings of the island’s equities on speculation a trade accord with China will boost earnings.

China Trade Pact

Taiwan and the mainland held talks on a planned Economic Cooperation Framework Agreement this week, with President Ma Ying-jeou pushing for lower import tariffs. China and Hong Kong account for about 40 percent of Taiwan’s exports.

“The Taiwan dollar is still on a rising trend,” said Henry Lin, a currency trader at Taiwan Shin Kong Commercial Bank in Taipei. “The China trade issue is attracting overseas funds.”

The local dollar strengthened 0.1 percent to NT$31.759 against its U.S. counterpart, according to Taipei Forex Inc. It advanced 0.4 percent this week.

Elsewhere in the region, the Thai baht appreciated 0.2 percent in the five days to 32.36 per dollar, Indonesia’s rupiah climbed 0.5 percent to 9,080, and the Vietnamese dong rose 0.1 percent to 19,075. China’s yuan was little changed at 6.8256.