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Taiwan dollar, baht lead gains in Asian currencies

The New Taiwan dollar and the Thai baht led gains among Asian currencies this week as investor appetite for the region's assets returned.

The Taiwanese currency advanced 0.8 percent, the second-best performer of the 10 most-traded Asian currencies excluding the yen. Exchange rates also rose on speculation central banks are allowing their currencies to appreciate to temper inflation. The baht climbed to its highest level since 1997 after the government said it was reviewing capital controls imposed after the ouster of former Thai prime minister Thaksin Shinawatra in late 2006.

The Taiwanese currency added 0.8 percent this week to NT$31.740, said Taipei Forex Inc, the biggest advance since the period ended Sept. 28 and a fifth week of gains.

"There were a lot of overseas fund inflows and exporters were dumping the US dollar," said Gary Huang, a currency trader at Union Bank of Taiwan (聯邦銀行) in Taipei. "The central bank may be using the Taiwan dollar's gain to help temper inflation."

The rupiah gained 0.8 percent this week to 9,169 per dollar and the Singapore dollar rose 0.4 percent to S$1.4138.

Thailand's baht rose the most in the five days since November in onshore trading on speculation exporters had exchanged overseas earnings to guard against further losses in the dollar.

The baht advanced past 32.70 per US dollar on Friday for the first time since August 1997 and was the best performing Asian currency this week. The government on Tuesday said it will decide by April whether to lift remaining restrictions on capital entering the nation.

"The central bank hasn't been aggressively intervening" to slow baht appreciation, said Tetsuo Yoshikoshi, a market analyst in Singapore at Sumitomo Mitsui Banking Corp Exporters "are selling dollars, fearing some sort of change to capital controls will push the dollar lower."

The baht climbed 1.2 percent to 32.56, according to data compiled by Bloomberg.

South Korea's won posted a weekly loss as overseas investors added to sales of the nation's shares. The won is the second-worst performer of the 16 most-active currencies this year as funds abroad sold Korean stocks on every day except three this year, offloading US$10.4 billion more than they bought.

Benchmark Asian stock markets on Friday followed declines in US equities after Federal Reserve Chairman Ben Bernanke said the "downside risks to growth have increased."

"Both onshore and offshore players are inclined to go long with dollars after the drop in US shares," said Kim Sung-soon, a currency dealer at state-run Industrial Bank of Korea in Seoul. "Foreign selling of stocks is heavily on the mind of traders."

Korea's currency fell 0.4 percent this week to 945.05 against the dollar, according to Seoul Money Brokerage Services Ltd. A long position is a bet an asset will gain.

The KOSPI index of shares declined 0.2 percent on Friday, adding to this year's 11 percent loss.

The Philippine peso fell for a second week on concern an Associated Press report of a plan to assassinate Philippine President Gloria Macapagal Arroyo will cause investors to shun the nation's assets.

The currency was the second-worst performer this month among the 10-most active Asian currencies before yesterday's protest rally against alleged corruption in government.

The Philippine currency traded at 40.70 in Manila, according to data compiled by Bloomberg. It closed at 41.00 on Thursday and 40.65 on Feb. 8, based on data from the Bankers Association of the Philippines.

Elsewhere, Vietnam's dong added 0.1 percent in the week to 15,957.5 per dollar.
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