March 18 (Bloomberg) -- South Korea's won had its best week in seven on overseas demand for the nation's stocks as Asia's third-largest economy expands.

The country's department store sales gained for a 13th month in February, raising speculation increasing consumer spending will help push up company earnings. The won is the fourth-best performer of the 15 Asia-Pacific currencies tracked by Bloomberg, up 4 percent this year.

``Domestic demand is starting to pick up, which is very encouraging, and the strengthening trend in the won can continue,'' said Magnus Prim, a senior currency strategist in Singapore at Skandinaviska Enskilda Banken. ``There's going to be foreign buying of the nation's stocks, helping the currency.''

The won climbed 0.9 percent to 971.20 against the dollar, according to Seoul Money Brokerage Services Ltd. It may strengthen to 950 by the middle of the year, said Prim.

Global investors took up a net $301 million of shares in the past five days, after selling more than they bought last week, according to stock exchange figures.

Combined sales at Lotte Department Store Co., Hyundai Department Store Co. and Shinsegae Co., the nation's three- biggest store chains, grew 5.3 percent from a year earlier, the commerce ministry said yesterday. That follows 12 percent growth in January.

The government and the central bank expect the economy to expand about 5 percent this year, up from last year's 4 percent. That would be the fastest in four years.

Extra Yield

Indonesia's rupiah also advanced for the week, reaching the strongest in 13 months March 15, on speculation investors bought the nation's high-yielding debt.

The extra yield investors receive from buying Indonesian 10-year bonds over like-maturity U.S. Treasuries widened to 7.9 percentage points this week, the most since March 1. The rupiah has gained 7.2 percent this year, the best performer of the 15 Asia-Pacific currencies.

``The bond market has been a major recipient of foreign capital,'' said Irene Cheung, a currency strategist in Singapore at ABN Amro Bank NV. ``We're very positive on the currency, especially because of the bonds.''

The rupiah finished the week at 9,166 per dollar, a gain of 0.8 percent. It touched 9,125 on March 15, the highest since Jan. 27, 2005. Cheung forecasts the currency strengthening to 8,900 by May.

Malaysia's Ringgit

Overseas investors March 14 bought some of the 7.2 trillion rupiah ($787.9 million) of government debt sold by Indonesia's Finance Ministry, said Cheung. Indonesia received demand for 13.3 trillion rupiah of the debt, the finance ministry said.

The Malaysian ringgit advanced in the week as Second Finance Minister Nor Mohamed Yakcop said yesterday the stronger currency will help curb inflationary pressures. The ringgit has gained 2 percent this year. The strengthening local currency will help reduce imported inflation, he told reporters in Kuala Lumpur.

``It will be seen as a green light for further currency strength,'' Shahab Jalinoos, head of Asian currency strategy at ABN Amro Holding NV in Singapore, wrote in a note to clients.

The ringgit was at 3.7055 per dollar and gained 0.3 percent this week. It reached 3.7015 yesterday, the strongest since Malaysia ended a currency peg to the dollar in July.

Rupee Support

Elsewhere in the region, the Indian rupee advanced for the week as record amounts of funds from overseas flowed into the nation's stocks. International investors bought $3.4 billion of Indian shares this year, more than the same period in 2005, on optimism growth will boost corporate profit and dividends. They purchased a record $10.7 billion last year.

``There's a good amount of money coming in, supporting the rupee,'' said Paresh Nayar, chief currency trader at Development Credit Bank Ltd. in Mumbai. ``Foreign inflows into the stock market are very strong and expected to continue.''

The Indian rupee traded at 44.43 per dollar, from 44.50 on March 10.

The Thai baht was little changed on the week, trading at 39.08 per dollar. Thousands of demonstrators rallied outside the offices of Prime Minister Thaksin Shinawatra, demanding his resignation.

Thailand's three largest opposition parties are boycotting elections in April in protest at Thaksin's refusal to accede to their constitutional reform package. Controversy over Thaksin's rule was spurred by a tax-free $1.9 billion his family made in January from selling a stake in Shin Corp. to a Singapore government investment fund.

The Taiwan dollar climbed 0.3 percent to NT$32.43 per dollar in the five days, according to Taipei Forex Inc. The Philippine peso strengthened 0.5 percent to 51.04, according to the Bankers Association of the Philippine.

To contact the reporter on this story: Jake Lee in Hong Kong jlee127@bloomberg.net

Last Updated: March 17, 2006 18:55 EST