Rupee Leads Weekly Advance in Asian Currencies on Fund Inflows

India’s rupee and South Korea’s won led gains in Asian currencies this week as global money managers boosted holdings of the region’s assets on signs of a pickup in the world economy.

The Bloomberg-JPMorgan Asia Dollar Index had its first weekly advance in December after data showed Chinese industrial companies’ profits rose for a third month in November while South Korea’s current-account surplus widened to a record $6.9 billion. International funds plowed $1.6 billion into the stock markets of India, Taiwan and South Korea this week, exchange data show. The MSCI Asia Pacific Index of regional shares rose for a sixth week.

“Strength in Taiwan and Korean currencies is related to a cyclical recovery in the region’s export-oriented economies,” said Ju Wang, a senior foreign-exchange strategist in Hong Kong at HSBC Holdings Plc. “Both are closely linked to China and recent data suggest some recovery is happening. Solid net inflows into emerging-market funds continue.”

The rupee strengthened 0.5 percent this week to 54.7750 per dollar in Mumbai, according to data compiled by Bloomberg. The won appreciated 0.4 percent to 1,070.53 while Malaysia’s ringgit advanced to 3.0640 from 3.0645 at the end of last week. Taiwan’s dollar weakened 0.1 percent to NT$29.136, after strengthening as much as 0.3 percent earlier.

The Asia Dollar Index, which tracks the region’s 10 most- active currencies excluding the yen, advanced 0.2 percent this week to 118.09.

Signs of Recovery

Taiwan’s factory output rose 5.85 percent in November from a year earlier, the fastest pace in nine months, official data showed on Dec. 24. South Korea’s industrial production rose 2.9 percent, beating the median forecast in a Bloomberg News survey for a 0.8 percent gain, according to a report yesterday.

China’s yuan strengthened yesterday, paring a weekly loss, before U.S. lawmakers resumed budget negotiations to avert more than $600 billion in spending cuts and tax increases that take effect in January. President Barack Obama said yesterday at the White House that he was “modestly optimistic” a deal could be reached.

The People’s Bank of China bolstered the reference rate by 0.08 percent to 6.2896 per dollar. The yuan rose 0.04 percent yesterday to 6.2335, paring the weekly loss to 0.06 percent.

“The trade and investment demand for yuan and Chinese assets has steadily increased, providing support to the currency,” said Bruce Yam, a currency strategist at Sun Hung Kai Financial Ltd. in Hong Kong. “No politician could afford to derail a recovery in the world’s largest economy, so risk appetite has improved on hopes that it’ll be solved.”

Elsewhere, Thailand’s baht and the Philippine peso were little changed for the week at 30.60 per dollar and 41.058, respectively. Indonesia’s rupiah rose 0.2 percent to 9,638, while Vietnamese dong advanced 0.1 percent to 20,838.

For the year, South Korea’s won gained 7.7 percent, the most among the 11 most-traded Asian currencies, followed by the peso and Singapore dollar. Yesterday was the last trading day of 2012 for financial markets in South Korea, Taiwan, Indonesia, Thailand and the Philippines.

To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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