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NT dollar registers best month since October 1998

Asian currencies rose, led by the New Taiwan dollar and the Malaysian ringgit, on speculation interest-rate cuts in the US will prompt investors to shift money into the region's higher-yielding assets.

The ringgit gained for a third month, touching the highest since October 1997. The NT dollar had its best month since October 1998 as the US currency slumped to a record low against the euro and the lowest in almost three years versus the yen. Traders increased bets the US Federal Reserve will reduce its 3 percent benchmark interest rate to 2.25 percent on March 18. Malaysia's overnight rate is 3.5 percent.

"The money is moving from the US to places with solid economies and higher-yields and in that case, Asia is good," said Hideki Hayashi, chief economist at Shinko Securities Co in Tokyo. "The dollar is becoming a lower-yielding currency and that puts appreciation pressure on Asian currencies."

The ringgit climbed 0.3 percent to 3.1930 on Friday in Kuala Lumpur, taking the monthly rally to 1.3 percent, data compiled by Bloomberg show.

The New Taiwan dollar this month strengthened 4 percent to NT$30.95, Taipei Forex Inc said.

The ringgit may rise to 3.18 by the end of the month, Hayashi said.

Traders see a 36 percent chance the Fed will cut its benchmark rate to 2.25 percent at next month's policy meeting, up from a 2 percent probability a week ago. The rest of the bets are for a 50 basis-point cut. A basis point is 0.01 percentage point. Malaysia's 50 basis-point interest-rate advantage over the US is the widest since December 2004, Bloomberg data show.

Taiwan's central bank increased its benchmark rate to 3.375 percent on Dec. 20 and Governor Perng Fai-nan (彭淮南) said that day interest rates need to be raised "preemptively" to curb inflation.

The central bank plans to raise borrowing costs by 0.125 percentage point at its quarterly meeting later this month, the Economic Daily News reported last week, without saying where it got the information.

South Korea's won posted its first monthly advance since October as the Bank of Korea's benchmark rate is 2 percentage points higher than the Fed's rate. The won climbed to the highest level in six weeks.

The won climbed 0.6 percent this month to 939.05 versus the dollar, according to Seoul Money Brokerage Services Ltd.

The Philippine peso rose for a sixth month, climbing 0.2 percent to 40.47.

The onshore Thai baht advanced to 31.30 per US dollar on Friday, the highest since August 1997, after the central bank governor said capital controls will be removed.

Indonesia's rupiah gained 0.2 percent on Friday to 9,061 and strengthened 2.1 percent last month.

The Singapore dollar rose 0.2 percent to S$1.3929, taking the monthly advance to 1.7 percent.

Elsewhere, the Vietnamese dong gained 0.3 percent this month to 15,935.
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