April 10 (Bloomberg) -- South Korea’s won, Indonesia’s rupiah and India’s rupee headed for weekly gains as signs of a global economic recovery encouraged investors to return to the region’s equities.

The won was set for a fifth weekly advance, the longest winning streak since September 2007, on speculation record-low borrowing costs and government stimulus will revive an economy on the brink of recession. Asian equity funds outside Japan drew the largest amount of new money in a year for the week ending April 8, according to EPFR Global, a research company based in Cambridge, Massachusetts.

“The market is pricing in a mild change in the view of the economy,” said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul. “Offshore players are offloading dollars.”

The won strengthened 1.7 percent this week to 1,318.55 per dollar as of 12:03 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. India’s rupee climbed 0.8 percent in the week to 50.01, the biggest advance since March 20. Indonesia’s rupiah advanced 1.5 percent to 11,310. Financial markets in India, Indonesia and Philippines were closed today for the Easter holiday.

The won rose 15 percent against the dollar in the past month, Asia’s best performance. Bank of Korea Governor Lee Seong Tae said yesterday the pace of the nation’s economic slowdown has “moderated significantly.” The economy will shrink 2.4 percent this year, the first contraction since 1998, before expanding 3.5 percent in 2010, the central bank said today.

Bond Sale

The gain in the won this week was also supported by the government’s $3 billion sale of global bonds. Proceeds from Korea’s first international bond issuance in three years will be used to support a currency that tumbled 26 percent against the dollar in the past 12 months.

Data in the past two weeks suggests the economy may be improving. A government report showed factory output in February had its biggest monthly gain since 1987 and a central bank survey showed manufacturers’ were the least pessimistic in five months.

The rupiah gained on speculation the central bank bought the currency to keep it stable before local markets were closed yesterday for the parliamentary elections. The currency also advanced as polls showed President Susilo Bambang Yudhoyono’s Democrat Party may more than double its seats in parliament, reducing the need for coalition partners that have blocked some of his economic stimulus proposals.

India’s currency strengthened past 50 per dollar as foreign investors’ purchases of Indian shares this month already exceeded the total for March.

Malaysian Ringgit

Malaysia’s ringgit is headed for its first weekly loss in five after the nation’s factory output fell for a sixth month, raising concern an economic slowdown is deepening. The currency dropped 0.8 percent to 3.6125 per dollar, according to data compiled by Bloomberg.

A government report yesterday showed industrial production fell 14.7 percent from a year ago in February, compared with a 13.5 percent drop in a Bloomberg survey. Malaysian Prime Minister Najib Razak yesterday replaced a quarter of the Cabinet, less than a week after taking office, in a bid to resurrect support for the ruling coalition.

“We’ve seen a lot of corporate orders for dollars this week,” said Jamil Baharuddin, a treasury dealer at RHB Bank in Kuala Lumpur. “We don’t see any indication of a recovery in the economy anytime soon.”

Taiwan Dollar

Taiwan’s dollar was set for its first weekly decline since February after the central bank reportedly stepped in to weaken the currency and help exporters weather a global recession.

The currency dropped 1.2 percent to NT$33.781 versus the U.S. dollar this week, the worst performance among Asia’s 10 most-used currencies. Overseas sales, which are equivalent to about 70 percent of the island’s gross domestic product, dropped for a seventh straight month in March, the government reported April 7.

“Investors are worried it may take a long time for exports to recover,” said Henry Lin, a foreign-exchange trader at Shin Kong Commercial Bank in Taipei. “Demand for dollars surged after the Taiwan dollar reached a three-month high this week.”

The Central Bank of the Republic of China (Taiwan) on April 7 warned local banks not to speculate on gains in the island’s dollar, the Commercial Times reported on April 8, citing unidentified traders. It bought between $400 million and $500 million of U.S. dollars that day to help drive down the local currency, the newspaper said.

Chinese Yuan

China’s yuan was little changed against the dollar this week at 6.8342 per dollar on speculation the government will keep the currency from appreciating to aid exporters as overseas sales slide.

The customs bureau will release trade figures for March as early as today. Exports fell by at least 10 percent last month from a year earlier, the International Business Daily reported this week, citing an unidentified official at the Ministry of Commerce.

“China’s policy of keeping a relatively stable currency will continue for at least a year,” said Lian Ping, chief economist at Shanghai-based Bank of Communications Ltd., part- owned by HSBC Holdings Plc. “Declines in exports won’t be reversed very soon.”

The Philippine peso fell 0.3 percent to 48.03 per dollar, ending three weeks of gains, on speculation more interest-rate cuts are needed to stoke the economy.

To contact the reporter on this story: Sandy Hendry in Hong Kong at shendry@bloomberg.net.