Tue, Nov 28, 2006 - Page 12 News List

Asian currencies gain on dollar

BLOOMBERG

The New Taiwan dollar jumped 0.4 percent to NT$32.704 against the US dollar yesterday, after touching NT$32.62, the highest since Aug. 18, according to Taipei Forex Inc.

The dollar fell against 11 of the 15 most-active Asia-Pacific currencies before reports that will probably show a deepening US housing market slump. Interest-rate futures show investors see a 51 percent chance the Federal Reserve will lower its benchmark at a March meeting, up from 17 percent on Nov. 15.

"This is positive for Asian currencies and they will be pushed up," said Shahab Jalinoos, head of Asian currency strategy at ABN Amro Bank NV in Singapore. "We've seen the dollar drop and the underlying fundamentals for the US are pointing down."

South Korea's won climbed 0.2 percent to 930.60 against the dollar at the 3pm close of onshore trading, after advancing as high as 927, the strongest since Oct. 24, 1997, according to Seoul Money Brokerage Services Ltd.

The National Association of Realtors' will release a report today showing purchases of previously owned homes dropped 0.5 percent last month, according to the median estimate in a Bloomberg News survey.

US President George W. Bush's economic advisers on Nov. 21 said in their semi-annual forecast that the US economy will grow 2.9 percent next year, down from 3.1 percent this year and slower than the 3.6 percent prediction in June.

By contrast, Taiwan's statistics bureau on Thursday raised its growth estimate for this year to 4.39 percent from 4.28 percent.

Malaysia's economy expanded 5.8 percent in the third quarter from a year earlier, the central bank said on Thursday. The Philippine economy may have grown as much as 5.8 percent in the third quarter from a year earlier, Economic Planning Director Dennis Arroyo said last week.

The Malaysian ringgit was little changed at 3.6370 after touching 3.6265, the highest since May 31, and the Thai baht edged up 0.2 percent to 36.42. The Philippine peso gained 0.1 percent to 49.65 and the Indonesian rupiah strengthened 0.1 percent to 9,136, according to data compiled by Bloomberg.

The won also rose as the yield premium on South Korean government bonds stayed near their highest level since April. The extra yield investors receive buying 10-year won-denominated debt over similar-maturity US notes rose to 0.34 percentage point.

"The dollar is weakening across the board and the won is also benefiting," said Hideki Hayashi, a foreign-exchange strategist in Tokyo at Shinko Securities Co. "When you think where you park money for now, South Korea, where the yield premium has been widening, has an advantage."

The currency may trade between 925 and 935 in a week, Hayashi said.

The won's strength is mainly because of "psychological factors" and authorities are closely monitoring moves in the currency, Oh Jae-kwon, head of the central bank's foreign exchange market operations team, said in an interview in Seoul yesterday. It's "not desirable to bet on an extreme rise," he said.

Finance Minister Kwon Okyu convened a government meeting this morning to discuss ways to help exporters suffering from the won's rise against the yen, the ministry said in a statement released in Gwacheon, South Korea.

The government will allow companies to borrow more through the Export and Import Bank of Korea, and extend the maturity on loans for businesses who are having problems because of the exchange rate, the ministry said.

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