Kuala Lumpur: South Korea's won and Malaysia's ringgit led weekly gains among Asian currencies on signs global investors are seeking higher returns in emerging markets because of their faster economic growth.
Asian equities and emerging-market debt attracted more fund inflows last week as investors withdrew money from developed market stocks, according to Cambridge, Massachusetts-based research company EPFR Global. Federal Reserve Chairman Ben Bernanke, who has kept benchmark rates near zero since December 2008, said US policymakers are prepared to take steps to aid growth because of an "unusually uncertain" outlook.
"The comments on the US economic outlook will support risk-taking momentum and demand for higher yields," said Godwin Chan, a trader in Kuala Lumpur at OSK Investment Bank Bhd.
The won rose 0.4 per cent last week to 1,199.15 (Dh3.65) per dollar in Seoul, according to data compiled by Bloomberg. The ringgit and the Singapore dollar each appreciated by the same amount in the week to 3.1965 and S$1.3709, respectively.
The Bloomberg-JPMorgan Asia Dollar Index has climbed 0.4 per cent in the past five days as the MSCI Asia Pacific Index of regional stocks had a third straight weekly advance. Developing economies in Asia will expand 9.2 per cent in 2010, compared with 2.6 per cent for advanced countries, the International Monetary Fund said on July 7.
A report this week will probably show South Korea's economy grew for a sixth straight quarter. Gross domestic product, the fourth largest in Asia, grew 1.3 per cent in the second quarter from the prior three months, according to the median of seven estimates in a Bloomberg survey before data due tomorrow.
The Bank of Korea boosted its benchmark interest rate this month to 2.25 per cent from a record low of 2 per cent. Bank Negara Malaysia has raised its overnight rate three times so far this year to 2.75 per cent after first-quarter economic growth accelerated at the fastest pace in a decade.
"Any currency belonging to a country with rising growth is attractive relative to the US dollar," said Douglas Borthwick, Connecticut-based managing director and head of trading for Faros Trading LLC.
Taiwan's dollar, which was little changed for the week, gained 0.1 per cent to NT$32.152 Friday. Foreign investors have pumped $1.2 billion (Dh4.4 billion) into the island's stocks this month, according to exchange data. A government report released after the market closed on Friday showed factory output rose 24 per cent in June from a year earlier, exceeding the median estimate in a Bloomberg survey of economists for a 22 per cent increase.
"Hot money is pouring into the stock market," said Eric Hsing, a debt trader at First Securities Inc. in Taipei. "The central bank will continue to slow the Taiwan dollar's growth to keep its edge on exports."
The Indian rupee climbed 0.4 per cent Friday to 46.945 per dollar, paring its loss to 0.4 per cent, after the EPFR report showed investors poured money into equity funds focused on India and China in the week ending July 21.
