HONG KONG: Asian currencies gained as the yen strengthened for a second day in Asia, boosting speculation that traders are increasing bets that regional central banks will refrain from selling their currencies to keep exports competitive.
A rising yen may make Japanese exports more expensive relative to regional competitors', while increasing Japan's buying power of foreign goods. Exports make up about 40% of South Korea's economy and almost half of the economies of Taiwan and Thailand.
“With Japan as a major trading partner, these currencies can gain as the yen does better, because of competitiveness,'' said David Mann, a currency strategist at Standard Chartered Bank Plc in Hong Kong.
The South Korean won climbed 0.6% to 957.28 against the US dollar, the highest in two months, at the 3pm close of onshore trading, according to Seoul Money Brokerage Services Ltd. The Singapore dollar gained 0.4% to S$1.6075.
The won and the yen had a correlation of 99% this week. A value of one means they moved together.
The Thai baht rose to its highest in more than a year after Prime Minister Thaksin Shinawatra resigned, alleviating a political standoff that has crippled his government. The currency has gained 6.9% this year as the central bank raised the rate twice to 4.5%.
The Indonesian rupiah traded near its highest since November 2004 as Finance Minister Sri Mulyani Indrawati said the currency reflected “strong'' favourable investor sentiment toward the country's economic progress.
“This has encouraged further rupiah buying,'' said StanChart's Mann. “It's good news for the rupiah and it could now go to 8,800.''
The rupiah rose as high as 8,973, the strongest since November 2004, and last traded at 9,009. It has climbed 9.1% this year, the world's best performer. – Bloomberg
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