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Asian Currencies Rise for Week as Central Banks Tolerate Gains

Asian currencies rose this week, led by South Korea’s won and the Philippine peso, on speculation central banks will tolerate appreciation and raise borrowing costs to tame inflation.

The Bloomberg-JPMorgan Asia Dollar Index climbed 0.5 percent this week as Philippine central bank Governor Amando Tetangco said March 1 there was less scope to keep borrowing costs unchanged as prices rise. Bank Indonesia said yesterday a strengthening rupiah is helping to curb import costs as it refrained from a second increase in a row in the benchmark interest rate. Policy makers in Malaysia, Thailand and South Korea meet next week to review rates.

“We expect all three to hike their policy rates owing to generally strong economic activity and rising core inflation pressures,” Rahul Bajoria, an economist in Singapore at Barclays Plc, said yesterday. “Rising food and transport costs” are stoking inflation, he said.

The won advanced 1.1 percent this week to 1,114.60 per dollar in Seoul, according to data compiled by Bloomberg. The peso climbed 1 percent to 43.268, Taiwan’s dollar rose 1 percent to NT$29.462, and Malaysia’s ringgit strengthened 0.7 percent to 3.0275. Indonesia’s rupiah gained 0.6 percent to 8,787.

Oil advanced for a third week on concern unrest in Libya will spread to other North African and Middle East energy exporters, curbing shipments. Crude in New York climbed 6.7 percent this week to $104.42 a barrel and has rallied 30 percent from a year earlier.

U.S. Outlook

Taiwan’s dollar halted a three-week losing streak after data from the U.S. signaled growth in the world’s largest economy is gathering pace, brightening the outlook for regional exports.

The currency rose to its strongest level in two weeks. Initial claims for jobless benefits fell to the lowest level since May 2008, figures showed on March 3.

“The recovery outlook for the U.S. is pretty good, and it’s supporting Taiwan’s dollar and other regional currencies,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. The currency may test NT$29 next week, he said.

The U.S. jobless rate fell to 8.9 percent in February, the lowest in almost two years, and employers added 192,000 jobs in a sign of growing confidence in the recovery, Labor Department Figures showed yesterday in Washington.

The peso rose this week on speculation the central bank will raise its benchmark policy rate after inflation accelerated in February at the fastest pace in nine months.

Asian Resilience

Consumer prices increased 4.3 percent from a year earlier, after a revised 3.6 percent gain in January, the National Statistics Office said in Manila yesterday. The median estimate in a Bloomberg News survey was for a 3.7 percent gain.

“I’m amazed at the resilience of these Asian currencies,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “While it doesn’t look like the turmoil in the Middle East will abate soon, the markets seem to have concluded at least for now that it won’t be that big an impact.”

Elsewhere, China’s yuan strengthened 0.1 percent this week to 6.5686 per dollar, according to the China Foreign Exchange Trade System. The Singapore dollar appreciated 0.5 percent to S$1.2674 and Thailand’s baht rose 0.5 percent to 30.49.

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