Yuan hits record high against dollar

ASIAN CURRENCIES ROUND-UP

The yuan rose to the strongest since a peg to the dollar was scrapped in July 2005, after the central bank reiterated its pledge to maintain a "tight'' monetary policy this year.

The currency made its biggest three-day gain since the end of the dollar link, after advancing 7 per cent in 2007, double the pace of the previous year.

The central bank will further control liquidity and improve the currency exchange mechanism in 2008 to "adjust the overall demand and improve the balance of international payments,'' Governor Zhou Xiaochuan said in a New Year's message on the bank's Web site on December 29.

The yuan's appreciation "is likely to continue this year'' as a response to "both domestic and external pressure,'' said Huang Yiping, chief Asia economist at Citigroup in Hong Kong. The Chinese government needs "to be more aggressive on monetary tightening'' to address "the rising inflationary pressure and risk of overheating,'' Huang said.

The yuan rose 0.15 per cent to 7.2934 a dollar as of 5:30 pm in Shanghai, according to the China Foreign Exchange Trade System. It touched 7.2930 a dollar, the strongest since the end of a dollar peg. The currency gained last year as the country's policy makers sought to curb inflation and reduce a record trade surplus.

South Korean Won Falls; Philippine Peso Gains
South Korea's won fell as local stocks tumbled, raising concerns that overseas investors will sell the nation's assets. The Philippine peso rose.

The won extended last year's 0.7 per cent decline as rising oil prices and speculation surrounding the US housing market slump dented the outlook for Korea's economic expansion.

The government cut this year's economic growth forecast to the "upper 4 per cent'' level, from an earlier 5 per cent estimate, Finance Minister Kwon Okyu said in a New Year's speech yesterday.

"With losses in the stock market widening, more and more players were switching to the dollar, dumping the won,'' said Ko Yun Jin, a currency dealer at Kookmin Bank in Seoul.

The South Korean currency fell 0.1 per cent to 936.90 a dollar as of the 3 pm local close, according to Seoul Money Brokerage Services. The currency climbed as high as 932, the strongest since December 17. The Kospi stock index fell 2.3 per cent.

Finance Minister Kwon today said currency-market volatility may increase and authorities will look to strengthen their monitoring of local and overseas markets and take action to minimize market nervousness.

Korean exports grew a less-than-expected 15 per cent last month as a slowdown in demand from the US and Japan tempered rising sales to China and West Asia, the Commerce Ministry said today. The figure was lower than the median estimate of 20.2 per cent in a Bloomberg News survey of economists.

Export growth will slow to 11.6 per cent this year from 14.2 per cent in 2007, the Commerce Ministry forecast today.