Korean Won, Lira to Strengthen in 2011, Bank of Mitsubishi Says

The Korean won and the Turkish lira may be among the strongest emerging-market currencies against the dollar in 2011, Bank of Tokyo-Mitsubishi UFJ Ltd. currency strategist Lee Hardman said in a report today.

The won may appreciate 7.2 percent in 2011 to 1,050 per dollar, buoyed by economic growth, which averaged 6.6 percent in the first three quarters of 2010, Hardman wrote in an annual outlook from London. The forecast could be upset by any conflict between North and South Korea, he said.

The lira will also benefit from the Turkish economy’s growth and the possibility of a ratings upgrade, strengthening by 5 percent to 1.47 per dollar by the end of 2011, he said. China’s yuan, also known as the renminbi, will appreciate 4 percent against the dollar as the authorities try to limit inflation, he said.

“We expect further tightening measures this year in order to offset the inflation threat which will result in a moderation in growth and help contain renminbi appreciation,” Hardman wrote.

The Brazilian real may depreciate 4.5 percent as authorities attempt to weaken demand for the currency and the South African rand may decline 8.4 percent as falling inflation leaves “scope for additional monetary easing.”

To contact the reporter on this story: Jason Webb in London at jwebb25@bloomberg.net.

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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