(Bloomberg) -- Asian currencies mostly gained this week, led by the Indonesian rupiah, as signs a global recession is easing whetted investors’ risk appetite, helping draw funds to emerging markets.
The rupiah surged 5.5 percent, its best performance this year, as early election results indicating President Susilo Bambang Yudhoyono will stay in office bolstered demand for Indonesian assets. The MSCI Asia Pacific index of shares rose for a sixth week after reports showed industrial production and investment picked up last month in China, the region’s second- biggest economy.
“I think there’s some reason for optimism, with an economic trough possibly reached,” said Naomi Fink, a senior currency analyst with Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “In Asia, China’s March data was one hopeful signal.”
The rupiah traded at 10,738 per dollar as of 3:33 p.m. in Jakarta, compared with 11,310 at the end of last week, and South Korea’s won advanced for a sixth week to 1,331.55, according to data compiled by Bloomberg. The Asia Dollar Index climbed 0.3 percent to 105.54.
Overseas investors pumped more money into emerging-market equities for a sixth week, adding to evidence risk aversion among global funds is receding. They bought a net $1.7 billion in the week through April 15, according to Cambridge, Massachusetts- based EPFR Global, a research company that tracks $11 trillion of funds worldwide.
Worst Over
Urban fixed-asset investment in China surged 29 percent in March and industrial-output growth accelerated, reports showed yesterday. First-quarter gross domestic product increased 6.1 percent, the slowest pace in almost a decade, as exports slumped.
“More and more investors think the worst of the economic deterioration may be over and ready to take more risk,” said Sebastien Barbe, a currency strategist with Hong Kong-based Calyon, the investment banking unit of France’s Credit Agricole SA.
The rupiah is the only gainer this year among Asia’s 10 most-traded currencies after President Yudhoyono, who plans to stand for re-election in July, won the support of more than half of respondents in a poll following parliamentary elections last week. He was favored by 53 percent of 4,200 people who cast their ballots in the April 9 contest, according to the Indonesian Survey Institute’s exit-survey.
India Recovery
The Southeast Asian nation raised $650 million from its first-ever international sale of Islamic dollar bonds, attracting orders for seven times the debt on offer.
The euro fell to a one-month low against the dollar after European Central Bank President Jean-Claude Trichet said the central bank must do everything possible to boost confidence, signaling he may cut interest rates further.
The euro dropped to $1.3062 in London from $1.3186 in New York yesterday. The yen declined to 99.33 a dollar from 99.27.
India’s rupee may strengthen almost 6 percent to reach 47 a dollar in six months on better prospects for global growth and an increase in foreign investment, according to Barclays Plc.
“In our view, the government believes that the worst of the slowdown in growth is over,” Sailesh Jha, an economist at the world’s third-largest currency trader, wrote in a report yesterday. “The risks to our growth forecast are tilted to the upside versus our previous assessment of risks to the downside.”
The rupee rose 0.6 percent this week to 49.767 per dollar.
Korean Won ‘Uptrend’
South Korea’s won completed a sixth weekly gain, its best winning streak in 18 months, on optimism record-low borrowing costs and government stimulus plans will help salvage an economy teetering on the brink of recession. The currency has gained 3.9 percent versus the dollar so far this month.
Sales at the nation’s major department stores rose in March on purchases of luxury goods, food and cosmetics, a government report showed today.
“Overall, the won’s uptrend is valid though the pace of gains may not be as fast as last month,” said Jo Hyun Suk, a currency dealer with Korea Exchange Bank in Seoul. “Demand and supply of dollars are well balanced as exporters settle deals around mid-1,300, while importers buy on dips in the dollar.”
Elsewhere, the Philippine peso climbed 0.3 percent this week to 47.865 against the U.S. currency. Taiwan’s dollar was little changed at NT$33.8160, compared with NT$33.795 on April 10. The Thai baht fell 0.1 percent to 35.45 from 35.40 a week ago. Malaysian ringgit was little changed for the week at 3.6170 versus 3.6165.
To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net.
