Yen, yuan buck Asian drop on US recession

ASIAN CURRENCIES ROUND-UP

The yen and the Swiss franc strengthened as global stocks slumped, prompting investors to sell higher-yielding assets funded with loans made in Japan and Switzerland.

The Japanese currency rose the most against currencies such as the South African rand and Canadian dollar as concern global economic growth will slow deepened after stocks in Europe and Asia fell. The Swiss franc rose against 15 of the 16 most-active currencies tracked by Bloomberg today.

The currency has made its best start to a year since the end of the peg, gaining 1.4 per cent, after rising about 7 per cent in 2007. It gained 0.44 per cent in two days, the biggest such advance since December 28.

The yuan will rise to 6.82 per dollar by the end of 2008, according to the median estimate of 30 analysts surveyed by Bloomberg News. Forward contracts show traders are betting on an 8.2 per cent advance to 6.6540 in the next 12 months.

South Korea's won and the Philippine peso led declines among Asian currencies on speculation demand for exports will wane as the US economy enters a recession.

The won extended a two-week loss as investors reduced their holdings of emerging-market assets. Equity markets across Asia dropped today, with the region's benchmark MSCI Asia Pacific Index set for its biggest monthly drop since September 2001 on concern that the US and Japan are slowing. The won fell 0.3 per cent to 949.80 as of the 3 p.m. close in Seoul, according to Seoul Money Brokerage Services Ltd.

The Philippine peso dropped 0.3 per cent to 40.94 versus the dollar, according to data compiled by Bloomberg. Thailand's baht was little changed at 33.05 in onshore trading, holding near its highest in more than a decade.

Malaysia's ringgit also slipped, snapping a three-day advance, as Asian stocks followed losses in US equities. Malaysia ships one-fifth of its goods to the US, its biggest overseas market.

The ringgit declined 0.2 per cent to 3.2450 against the dollar, after reaching 3.2375 on January 25, the strongest since November 1997, according to data compiled by Bloomberg.

The rupiah declined 0.3 per cent to 9,354 per US dollar, compared with 9,328 on January 25, according to data compiled by Bloomberg.

Elsewhere, the Taiwanese dollar declined 0.1 per cent to NT$32.345 and the Singapore dollar was little changed at S$1.4234. Vietnam's dong held at 15,978.