Asian currencies had a winning week on speculation rising exports will fuel economic growth and attract foreign investors to stocks. South Korea's won had its biggest weekly gain in a month.
The New Taiwan dollar on Friday had its strongest close in almost three weeks as a government report on Thursday showed November export orders rose the fastest in seven months. Regional currencies may appeal to international money managers as they bet the dollar will extend its slide, sapping US asset returns, said Ashley Davies, a Singapore-based currency strategist at UBS AG.
"The combination of dollar weakness and generally still-okay global growth next year" will lure funds to Asian stocks, Davies said.
"That should provide some support for Asian currencies," he said.
The NT this week climbed 0.5 percent to NT$32.19 against the US currency, the highest daily close since Dec. 7, according to Taipei Forex Inc.
Thailand's baht this week rose 0.6 percent to 39 baht against the US dollar, the Singapore dollar advanced 0.4 percent to S$1.6403, and India's rupee strengthened 0.4 percent to Rs43.78.
The four currencies were also heading for a winning year against the US dollar.
Overseas fund managers this year bought a net NT$275 billion (US$8.55 billion) of Taiwan's stocks, according to stock exchange figures, pushing the currency up 5.5 percent. This month through Dec. 23, they bought a net 22 billion baht (US$564 million) of Thai stocks, double the level in the same period last month, and a net Rs2 trillion (US$215 million) of Indonesia's equities.
Taiwan's export orders jumped 30 percent from a year ago to US$19.8 billion, the Ministry of Economic Affairs said on Thursday.
Expectations that orders, indicative of shipments in one to three months, will translate into increased exports may make Taiwan more attractive for investors, said Spencer White, head of Asia-Pacific equity strategy at Merrill Lynch & Co in Hong Kong.
Taiwan's shipments rose last month at their slowest in 14 months, the Ministry of Finance said on Dec. 7.
"If exports do indeed begin to bottom around the mid-part of 2005, then Taiwan is absolutely a must-own market," White said.
Higher exports help raise corporate sales, increasing asset returns, spurring economic growth and luring funds into Asia.
The NT dollar may rise to NT$32 in three months, according to a recent report by UBS.