Rupiah, peso advance as global stocks rally

ASIAN CURRENCIES ROUND-UP

The Indonesian rupiah and Philippine peso, among currencies in Asia that offer the highest yields, rose as gains in global stocks encouraged investors to buy emerging-market assets.

The rupiah rose as the Jakarta Composite Index today surged 3 per cent after overseas funds yesterday bought more shares than they sold.

The peso climbed 1 per cent, the most in Asia, before the central bank meets tomorrow to decide on interest rates. The Philippines key borrowing costs are 6 per cent and Indonesia's 8.25 per cent, compared with the US's 5.25 per cent.

"People are trying to go back to higher-yielding currencies, but in a measured fashion,'' said Vishnu Varathan, an economist at Forecast Singapore.

The rupiah gained 0.5 per cent to 9,395 against the dollar as of 3:44 pm in Jakarta, according to data compiled by Bloomberg. The currency is Asia's worst performer this year, losing 4.3 per cent. The peso rose to 46.455 per dollar.

The Morgan Stanley Capital International Asia-Pacific Index of shares gained for a third day, by 0.3 per cent.

The peso also climbed on speculation the central bank is selling dollars to prevent the currency from reaching the 47 level, said Marcelo Ayes, senior treasury vice-president at Rizal Commercial Banking Corp in Manila.

"The central bank is trying to smoothen the currency movement given the recent volatility in the market,'' said Ayes.

Nine of 10 of Asia's most traded currencies have dropped this month as losses related to subprime mortgages spread. South Korea's won fell 0.1 per cent to 944.10.

Market volatility
Financial market turmoil needs to be closely watched to ensure risks to the global economic expansion don't become excessive, Japan and South Korea's finance ministers said today.

The ministers "recognised the need for continuous monitoring of the volatility in international financial markets,'' according to the statement.

US Treasury Secretary Henry Paulson said in a CNBC interview yesterday that volatility in credit markets will "take time'' to subside.

The Thai baht fell 0.2 per cent onshore to 34.46. Prime Minister Surayud Chulanont said December 23 is the "most appropriate'' date for a general election, and that will be discussed with the Election Commission. His comments came after the majority of eligible voters approved the junta's draft for a constitution on August 19.

Elsewhere, the Taiwan dollar slipped for a second day, declining 0.1 per cent to NT$32.939 versus the US currency, according to Taipei Forex Inc. The Vietnam dong weakened 0.02 per cent to 16,247 and the Malaysian ringgit rose 0.5 per cent to 3.4810.

Malaysia's inflation accelerated to a five-month high in July, the Department of Statistics said in a report in Putrajaya today. The consumer price index rose 1.6 per cent from a year ago.