Bullish stocks lift Ringgit, won

ASIAN CURRENCIES ROUND-UP

Asian currencies such as Malaysia's ringgit and South Korea's won advanced as the region's share markets rose, easing concerns that foreign investors will take more money out of emerging markets.

The won strengthened for a second day as stock exchange data showed non-Korean fund managers purchasing more equities than they bought for the first time since November 7.

Concerns that global economic growth will slow due to credit market losses in the US sent the benchmark Kospi down for the past four weeks and the won to a two-month low on November 22.

"The won's direction is largely influenced by the stock performance as people pay close attention to risk appetite,'' said Yuji Kameoka, a senior economist and currency analyst at Daiwa Institute of Research in Tokyo.

"When the stocks are rising, it's easier to buy the won.'' The won climbed 0.1 per cent to 929.40 against the dollar at the 3 pm close of onshore trading, according to Seoul Money Brokerage Services. The currency may trade between 925 and 935 for the next two weeks, Kameoka said.

The MSCI Asia Pacific Index of regional shares added 2.7 per cent, its biggest advance since September 19. In Malaysia, the ringgit traded at its strongest in more than a week as gains in US Thanksgiving holiday spending boosted Asian stocks.

'Buying Support'
"The US provided buying support and Asian stock markets have somewhat stabilized,'' said Pong Teng Siew, head of research at MIMB Investment Bank in Kuala Lumpur. "Most Asian currencies should have a strengthening bias.''

The ringgit appreciated 0.3 per cent to 3.3563, according to data compiled by Bloomberg.

The Philippine peso held near a seven-year high as the key stock index gained, signaling that risk-aversion may be fading before a possible US interest-rate cut next month.

"The peso is strong against the backdrop of a weak US dollar on expectations that the US Fed will cut rates on December 11,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking. "Risk aversion is easing.''

The peso closed onshore trading little changed at 42.865 against the dollar from November 23, according to Tullett Prebon, the world's second largest inter-dealer broker. The peso added 1.5 per cent last week.

Thailand's Controls
Thailand's central bank may lift its capital controls after national elections on December 23, a move that may boost the currency by about 19 per cent by the end of next year, Royal Bank of Scotland said in a report.

In December, the Bank of Thailand imposed restrictions on foreign investments to curb the currency gains, causing the baht to trade at a higher exchange rate overseas than in Thailand. Elections may help revive consumer confidence that dropped to a five-year low following a military coup in September 2006.

"When they (Thailand) imposed controls, there was political turbulence and now they are going to elect the new democratic government,'' said Chia Woon Khien, a local markets strategist for non-Japan Asia in Hong Kong at RBS. "The currency will continue to improve.''

The baht was little changed at 33.85 onshore against the dollar, while the currency gained 0.4 per cent to 31.20 offshore, according to data compiled by Bloomberg.

Converging Rates
The military junta that seized power in a bloodless coup imposed rules to curb last year's 13 per cent gain in the currency and protect exporters.

Instead, they have caused rifts within the government, eroded consumer confidence and failed to halt a 5.6 per cent appreciation in the onshore baht and a 13 per cent jump in its offshore equivalent this year. A 19 per cent advance in the currency next year would be the most since 1997.

The two spot rates will probably converge after the lifting of capital controls, according to the report written by Chia and Euben Paracuelles, economic researcher for non-Japan Asia, at RBS. The bank, the world's fifth-biggest currency trader, expects the baht to advance to 28.5 by the end of 2008.

The baht will trade at 31.8 against the dollar by the end of next year, according to the median estimate of 16 strategists surveyed by Bloomberg.

Elsewhere, the Singapore dollar edged up 0.2 per cent to S$1.4409. The Indonesian rupiah declined 0.3 per cent to 9,386. The Vietnamese dong was little changed at 16,050 from November 23. The Taiwan dollar exchanged at NT$32.32 from the earlier NT$32.324, according to Taipei Forex.