Won gains as credit woes ease

ASIAN CURRENCIES ROUND-UP

The South Korean won rose after the government sought to soothe investors' concerns about the spread of the US subprime mortgage crisis and the effect on the north Asian economy.

The won rebounded from near a two-month low as Vice Finance Minister Kim Seok Dong pledged to provide cash in case of a credit crunch, adding that the contagion from the US mortgage rout in South Korea's markets is "low''. Stocks in Malaysia, Singapore, South Korea and Taiwan rebounded.

"We're seeing some stabilisation globally over US concerns and that's going to help the won,'' said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corporation in Singapore. "The fundamental picture is still pretty supportive for the won.''

Korea's currency climbed 0.3 per cent to 929.60 against the dollar at the close of onshore trading, according to Seoul Money Brokerage Services. It fell as low as 932 on August 10, the weakest since June 13. The peso gained 0.2 per cent to 45.640 per dollar even as stocks declined.

The Morgan Stanley Capital International Asia Pacific index of regional shares rose 0.2 per cent following the 3 per cent slide on August 10, the biggest since March.

The central banks in the Philippines, Singapore, Indonesia, India, and Malaysia have said they are prepared to add cash into their systems if required. The Bank of Japan and the Reserve Bank of Australia added $6.4 billion to their banking systems today, following injections by the European Central Bank and the US Federal Reserve on August 10 to ease concerns about a credit squeeze.

'Calmed Down'

"Markets have calmed down a bit with some cash infusion from the central banks,'' said Rafael Algarra, the treasurer at Security Bank Corporation in Manila. "Risk aversion has eased a bit and we may see some funds buying local stocks.''

The Singapore dollar rose 0.2 per cent to S$1.5191. A report on August 15 may show retail sales growth accelerated to 7.6 per cent in June from a year earlier, according go the median forecast of 12 economists surveyed by Bloomberg News.

Singapore's dollar is managed against a basket of currencies of its biggest trading partners.

Elsewhere, Asian currencies were little changed, with the Taiwan dollar at NT$32.965 and the Indonesian rupiah at 9,345.

The rupiah, Asia's worst-performing currency this year, will regain ground by year-end as interest-rate cuts accelerate growth, said DBS Group Holdings.

The rupiah will climb 4.2 per cent to 8,950 per dollar, the strongest since June, as the highest bond yields in Asia attract investors, said Philip Wee, a senior currency economist at Singapore's biggest bank.

Indonesia's central bank won't let the rupiah weaken too fast and may enter the market if needed, Deputy Governor Hartadi Sarwono said today. A weakening currency may increase prices of imported wheat, auto parts and electronics, spurring inflation and force the central bank to delay cutting borrowing costs.

The Vietnam dong held at 16,200 per dollar. Thailand's markets were closed today for a national holiday. The Malaysian ringgit was 0.04 per cent stronger at 3.4750.

"It has not been necessary to inject liquidity,'' Malaysian Central Bank Governor Zeti Akhtar Aziz told reporters today in Kuala Lumpur. "We will monitor the situation very closely.'' The central bank is able to provide funds if necessary, she said.